Democrats please explain something for me.

[JMortensen]

Can you name a country that has pure anarchy as a form of government?

No, but they would have no basis to call themselves a country, now would they? Since this only exists as a concept or could possibly be said to exist only in a very small tribal unit, we can leave it alone.

 

Do you think your chart deals with reality, honestly?

If the idea of the charts is to understand political theory, than I think that my chart has a better grasp on the reality of those theories than yours. It is not reality in and of itself, but a more accurate portrayal of what really happens in govts in the world. Otherwise I wouldn't have posted here 10 times. When you put totalitarianism on one side of the chart and communism on the other, that makes the chart useless and the understanding of the concept is then flawed IMO. If you didn't think that your chart was a better reflection of reality, then why did you keep at it? Maybe you were just taunting me...

 

Anyhow,

[Heavy Z]

1.When you put totalitarianism on one side of the chart and communism on the other, that makes the chart useless and the understanding of the concept is then flawed IMO. 2.If you didn't think that your chart was a better reflection of reality, then why did you keep at it?

 

 

1. I'm seeing commies on the left and facism on the right. As the multi-color chart I posted shows, tyrants appear in both flavors. Also, as John C said countries can swing from temporary anarchy right across the scale to tyranny on your chart as well, so obviously swings can happen.

 

2. I kept at it never to question any part of your reasoning aside from that you took part of the chart above and part of the other chart and spliced them as if they were compatible, which they are not. No biggie, just a minor observation.

 

And no country has any "pure" form of any type of government.

 

Yep, that's what I was getting at in my last post.

[JMortensen]

1. I'm seeing commies on the left and facism on the right. As the multi-color chart I posted shows, tyrants appear in both flavors. Also, as John C said countries can swing from temporary anarchy right across the scale to tyranny on your chart as well, so obviously swings can happen.

Tyrants of the commie and fascist persuasions ARE ALL TYRANTS. The whole point of this exercise is to point out that there is no difference. Sure "swings" happen. Because the Right or the Left gains power. And it's more likely to stay on the Left, because the Right GIVES IT BACK. The Right doesn't want it!!!

 

2. I kept at it never to question any part of your reasoning aside from that you took part of the chart above and part of the other chart and spliced them as if they were compatible, which they are not.

Right, the one chart replaces the other. But they both refer to the right and the left, and they both are talking about the same right and left. It's just that one is more realistic than the other.

 

Here I go, last try then I give up.

http://www.wordiq.com/definition/Political_spectrum

...numerous alternatives exist, usually having been developed by people who feel their views are not fairly represented on the traditional right-left spectrum.

Another alternative spectrum offered at American Federalist Journal emphasizes the degree of political control, and thus places totalitarianism at one extreme and anarchism (no government at all) at the other extreme.

 

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=34468

The most common error is to postulate a Communist left-wing extreme opposed by an extreme Nazi right wing. Not only does this leave out a substantial body of political and philosophical thought, but the construction falls apart the moment the two socialist ideologies are compared. Any reasonable comparison inevitably forces the confused advocates of such a definition to assert that the spectrum is actually a circle, in which case the terms left and right, much less left-wing and right-wing, are wholly nonsensical.

Despite left-liberal chest-beating with regard to the Freedom of the Press, I noted it is primarily Democrats who support government-run media and the limitations on the individual inflicted by federal regulation of the airwaves and campaign-finance reform. National Sovereignty reflects both a willingness to sacrifice it in favor of international treaties and governing bodies as well as a lack of respect for the sovereignty of other nations or national borders. The last item, Central State Authority, represents the general tendency of the philosophy to support or oppose increased central state power through its policies.

 

http://www.geocities.com/SouthBeach/Club/7298/libertarian.html

This “spectrum†contains a number of insidiously narrow-minded implications. One of them is that Conservatives are linked to Fascists, when such a connection does not exist. Conservatives want the government to leave the economy alone, while Fascism revolves entirely around the government controlling it.

So basically, a Fascist government is just like a Socialist one, only it pretends to have individual property rights, when the government actually has the uncontested authority to control the lives and belongings of everyone. Stated more simply, fascism is socialism masquerading as capitalism.

 

http://www.neusysinc.com/columnarchive/colm0003.html

There is a version of the political spectrum that many Conservatives have been using without confusion for some years. The spectrum measures how much control a person believes governments should have over society. Near the extreme left end are those who believe in total government: Communists, Nazis, fascists, and other totalitarian socialists. At the extreme right end are those who believe in no government: anarchists. Inside these "fringe" positions we find the Liberals, Conservatives and Libertarians, along with variations of these. Notice that this puts Conservatives near the center, between the big-government policies of the Liberals and the minuscule-government ideas of the Libertarians. Could Conservatives get used to being called "moderates?"

 

http://geocities.com/jonjayray/whatare.html

There can be no doubt that Margaret Thatcher and Ronald Reagan were Rightists but they actively worked to reduce the power, influence and control of the governments that they led. The contrast is very clear. Not everyone is as power-mad as the Leftist.

[Heavy Z]

Heh, I just added "No biggie, just a minor observation" to my last post and this is what I click back to.

 

Thank you for supporting your views.

[Guest 2slo4u]

"Democrat" and "Republican" are just labels. If you could switch the figurative labels somehow, you'd see that everyone cares about the same exact issues, we just express our views in different manners. I don't see myself as either a donkey or elephant, I'm a human and I care about human issues... The bickering over theoretical "Why" and "If" and "Shoulda coulda woulda" really gets old sometiimes.

(Just my opinion that I'm able to express thanks to our largely Democratic society)

[A. G. Olphart]

Cyrus, I'm happy to have been able to help... If we disagree, I can agree to disagree.

I think that most of my opinions are rational, and I'm certain that you feel the same of yours.

 

JohnC, I'm not familiar with http://www.foreignaffairs.org. Just reading the article, it sounds a bit like another Hoover Institute (have they ever seen a Republican policy they didn't like?). A person does need to consider the sources of information to avoid lies by omission, the BIG LIE, and just plain spin. I did like this:

The creation of new jobs overseas will eventually lead to more jobs and higher incomes in the United States.

Oh, goody, I believe ... more pie in the sky to come after we starve to death.

 

Another interesting assertion:

But believing that offshore outsourcing causes unemployment is the economic equivalent of believing that the sun revolves around the earth: intuitively compelling but clearly wrong.

Tell it to all the factory workers now holding McJobs or their empty bellies.

 

I did appreciate the predictive figures conveniently wished away by the author

The McKinsey Global Institute estimates that the volume of offshore outsourcing will increase by 30 to 40 percent a year for the next five years. Forrester Research estimates that 3.3 million white-collar jobs will move overseas by 2015. According to projections, the hardest hit sectors will be financial services and information technology (IT). In one May 2003 survey of chief information officers, 68 percent of IT executives said that their offshore contracts would grow in the subsequent year. The Gartner research firm has estimated that by the end of this year, 1 out of every 10 IT jobs will be outsourced overseas. Deloitte Research predicts the outsourcing of 2 million financial-sector jobs by 2009

Finally, I noticed that the author advocates free trade; the only time I ever saw free trade helping the American people, our Republican administration changed the law. Bingo: No more cheap Canadian drugs for Americans... can't harm pharmeceutical company profits; they are big contributors. (The smoke screen of 'drug purity' really had holes in it: We had found a bogus drug distribution system right here in the US of A).

 

jmortensen, you may be correct in saying that conservatism does not lead to totalitarianism. The problem, at least as far as the USA is concerned, is that what we tend to think of as conservatism is in reality rabid capitalism. Recall early Standard Oil practices (hope that I remember this closely enough): Move into a town, undercut the competition, run at a loss locally until the competition folds, then jack prices up to support the same practice in new towns. Unrestrained capitalism can lead to the concentration of the nations wealth (and thus power) in very few hands. The Copper Kings of Montana and their shennanigans are an entertainng example of this behavior, including votes purchased on the open market. So capitalism could lead to totalitarianism, at which time, Thomas Jefferson's famous quote would apply: "A little revolution now and again is a good thing".

 

I'll leave you all with a thought on wage slaves... These people are actually preferable to business to true slaves: They require no care. If a real slave becomes ill, the owner has an investment to protect, and thus an interest in their getting well, even at some cost. If a wage slave gets sick and misses work, they may be fired and replaced (esp. in a 'fire at will' state). The more menial the job, the more certain the outcome.

Convenient!

[JMortensen]

Thomas Jefferson's famous quote would apply: "A little revolution now and again is a good thing".

I like his other quote: "The power to tax is the power to destroy" but that's just my preference...

 

If you're a factory worker and you lose your job, get another f'in job. If you don't like working at MacDonalds, get a better job. If you have to go to community college, go to community college. If you can't bring yourself to better yourself and your job skills, then shut up and flip that burger. It's not the govt's job to fix that problem for you.BTW--anyone else tried those "chicken selects"? It's like they "selected" the ass of the chicken.

 

I've known several self-made millionaires. None of them had government sponsored business training of any kind aside from their public education. One made millions then went bankrupt. Less than 10 years later he was making 40 million a year. No govt help. One started in his garage doing side jobs for buddies 4 wheelin rigs. Now he has millions in inventory in his warehouse. One went door to door at businesses selling credit card terminals and credit card processing. None waited for anyone else to hand them a better job, or bothered to bitch at the govt when they were unhappy with the job they had.

 

AG, it's kinda funny how you don't mind outsourcing pharmacists' jobs to Canada... what are those poor pharmacists going to do? Maybe they can get a McJob ...personally I don't mind either type of outsourcing.

[johnc]

This is who/what Foreign Affairs is (http://www.foreignaffairs.org):

 

INTRODUCTION

 

Founded in 1921, the Council on Foreign Relations is a non-profit and nonpartisan membership organization dedicated to improving the understanding of U.S. foreign policy and international affairs through the free exchange of ideas. Its 3,400 members include nearly all past and present Presidents, Secretaries of State, Defense and Treasury, other senior U.S. government officials, renowned scholars, and major leaders of business, media, human rights, and other non-governmental groups. Each year the Council sponsors several hundred meetings including televised debates and other media events, and publishes Foreign Affairs, the preeminent journal in the field, as well as dozens of other reports and books by noted experts.

 

Since 1922, the Council has published Foreign Affairs, America's most influential publication on international affairs and foreign policy. It is more than a magazine—it is the international forum of choice for the most important new ideas, analysis, and debate on the most significant issues in the world. Inevitably, articles published in Foreign Affairs shape the political dialogue for months and years to come.

 

With America more engaged in the world than ever, Foreign Affairs is performing an especially valuable service for its readers. And now educators and researchers can also benefit from Foreign Affairs through its Academic Resource Program, helping teach tomorrow's leaders and thinkers.

 

 

Despite the assertions in this thread, it really is one of most unbiased journals on foreign relations. Much more open minded then Foriegn Policy in my view. Articles from all perspectives are published and if you look at the various authors and the staff (http://www.foreignaffairs.org/about/staff) you'll see they have a great deal of "liberal" minded people.

 

And the author of the article I referenced regarding outsourcing (Dan Drezner) is voting for John Kerry.

 

Also, the board of directors of the Council of Foreign Relations consists of the following members:

 

Fouad Ajami

Madeleine K. Albright

Jeffrey Bewkes

Henry S. Bienen

Lee Cullum

Kenneth M. Duberstein

Jessica P. Einhorn

Martin S. Feldstein

Richard N. Foster

Helene D. Gayle

Louis V. Gerstner, Jr.

Maurice R. Greenberg

Richard N. Haass ex officio

Carla A. Hills (Vice Chairman)

Richard C. Holbrooke

Karen Elliott House

George J. Mitchell

Michael H. Moskow

Joseph S. Nye, Jr.

Ronald L. Olson

Peter G. Peterson (Chairman)

Thomas R. Pickering

Robert E. Rubin (Vice Chairman)

Warren B. Rudman

Richard E. Salomon

Anne-Marie Slaughter

Joan E. Spero

Laura D’Andrea Tyson

Vin Weber

Andrew Young

Fareed Zakaria

 

I would hardly call that a list of right-wing reactionary conservatives.

[JMortensen]

They may not be Republicans, but they're definitely Illuminati, right Kevin?

 

http://www.freedomfiles.org/Illuminati/cfr-article.htm

[blueovalz]

I view economics in much the same light as the 2nd law of thermodynamics in regards to this outsourcing issue. Concentrations of high income within the same environment of low income (globally speaking) will eventually mix and even out. The low income sector will have its income raised wilst the high income sector will see an overall lowering of income. We've been on the high end for a long time (again, globally) and it's finally taking it's toll. It won't matter who claims he will improve the economy. With jobs going to the lowest bidder (except you know who), and a new resource of extremely low bidding is introduced, only the low bidders will win. Per capita income (in the US) is going to go down, and in India, it's going to go up (as it will anywhere the income is significantly less than the highest income country). Baby boomers retiring, job outsourcing, and increasingly limited opportunities for expansion makes me feel we've seen the best no matter who is in office.

[johnc]

Here's a long winded post about why a very intelligent person will most likely vote for John Kerry:

 

http://www.danieldrezner.com/archives/001683.html

 

And here's another long winded post about why another very intelligent person will most likely vote for George Bush:

 

http://www.belgraviadispatch.com/archives/001564.html

[A. G. Olphart]

John C-

Thank you for the bit on (http://www.foreignaffairs.org). I didn't say they were bad, I merely pointed out that I didn't know them. Nice list of names... too bad that I'm not well enough read to recognize who all the folks are.

 

For my opinions, I can only rely on my own experience. Today's experiences include the announcement by Southern Bell that they are shutting down 150 jobs in my area, which have paid an average of $21.00/hour. (They have already closed all local personal contact offices). I think Terry has it right- with the globalization of the industrial economy, everything across the board will average out: Really bad news for American workers.

Another of today's experiences which I see as bad, is a fresh example of corporate welfare: Yahoo! News - Congress OKs $136B Corporate Tax-Cut Bill.

 

 

Jon M-

My guess (only a guess) is that your 'just get a job' sentiment comes from a man of greater than average intelligence who is currently employed based on his specialized skills. It's really not that simple, even for a person in that sort of situation who suddenly finds himself in the market for a new one. There are always younger graduates, with fresher brains and more current techniques/training. I don't say that the world owes anyone a living (another quote/paraphrase which I like "He who will not work, neither let him eat"). The problem is jobs for the willing, especially among the approximately half of our society which is below average. It ain't that easy, and there is no one more dangerous than a person with nothing to lose. We need all of our people to have a stake in society, and a job which allows them to live is pretty basic to that.

 

As to outsourcing, let's not play apples and oranges. Deciding where to make a purchase is not at all the same as firing the pharmacist and forcing customers to deal with Bhulabai or Fatima or Mr. Gupta by phone.

If I have any grasp at all of this 'free market' stuff, isn't a person supposed to be able to take his or her business elsewhere, thus determining by patronage (or lack thereof) which business thrives and which fails? If drugs stopped selling at inflated prices here in the USA, isn't the idea that the prices would come down to a level which no longer made it advantageous to buy elsewhere?

 

Revisiting the Canadian drugs fiasco. No one wakes up in the morning and says to his wife "Honey, lets run up to Canada and see if we can get a bottle of Bayer's for 20 cents less than at Walgren's". Likewise, I doubt if the well to do would even think of it; their drug purchases have no effect on their lifestyle. That leaves those with a heavy monthly drug bill that is negatively affecting their finances, as in "What don't we do this month: buy our drugs, pay for our heating fuel, or buy groceries". These are the people our government sold out for increased pharmaceutical corporation profits. Note that I said increased profits; if they weren't making money selling their products in Canada, they wouldn't do so.

 

Enough.

[JMortensen]

My guess (only a guess) is that your 'just get a job' sentiment comes from a man of greater than average intelligence who is currently employed based on his specialized skills.

I have no college degree, you make up your own mind about my intelligence or lack thereof . I have skills enough in that I've worked as a mechanic for some years, but that's not what I do now, so the specialized skills that I do have aren't currently helping me. Bottom line for me is that I refuse to believe that there is no work to be done. If you can't get hired by someone else or if you just hate working for someone else like I did, then start your own business and be your own boss. I'm not rich and I'm not poor, and my lack of wealth is not anyone's fault but mine.

 

As to the rest of your complaints about outsourcing, etc. I can only suggest you read this: http://www.factcheck.org/article225.html

[johnc]

Another of today's experiences which I see as bad, is a fresh example of corporate welfare: Yahoo! News - Congress OKs $136B Corporate Tax-Cut Bill.

 

Here's how I see things like cutting corporate taxes evening out:

 

1. Corporate taxes are cut.

2. Well run corporations make more profit.

3. Shareholders of the well run corporations see their share values increase.

4. Shareholders realize those profits when they sell the shares or receive larger dividend checks.

 

I've had this happen to me as a shareholder (Loral). Cutting taxes IS ALWAYS a good thing, whether its corporate, personal, sales, or property taxes. Reducing spending IS ALWAYS a good thing.

 

And now I'll wait for someone to throw out Enron, Tyco, Adelphia, Worldcom, etc. FYI... those were initially well run and profitable corporations until crimminals looted them.

[Guest Z-rific]

Speaking of McDonalds, wasn't it the Republicans that wanted to classify fast food as "manufacturing" jobs? Yes, it was. After all, I guess, you are building a burger.

 

Outsourcing isn't just a matter of sending jobs overseas. It's the government giving companies who do this tax breaks. When was it a good idea to promote taking jobs from Americans?

 

I've seen pro-Republican economists on news programs argue that outsourcing will help America. So, big business makes more profits by getting tax breaks (less money for our gvnt which is at record deficit) and paying less for employee wages. And what do they do with this money? Outsource more jobs, of course.

 

The economy that is benefitting the most is India's.

 

So, for the capitalist and free trade purist, let's promote outsourcing, and repeal laws on price gouging and monopolies. Insider trading? No problem. The most important point is to keep gvnt out of business. Right?

[JMortensen]

Outsourcing isn't just a matter of sending jobs overseas. It's the government giving companies who do this tax breaks. When was it a good idea to promote taking jobs from Americans?

 

There IS NO NEW TAX BREAK TO COMPANIES FROM BUSH TO ENCOURAGE THEM TO SEND JOBS ELSEWHERE. That is a lie. Companies compete in the free market and the US has SUCH A HIGH RATE ON CORPORATE TAXES, THAT IT BECOMES EASIER TO COMPETE OVERSEAS.

 

If we LOWER taxes that means the PENALTY for doing business in the US is reduced:

 

This is from the http://www.factcheck.org webpage I linked to previously:

 

In fact, tax experts say the incentive has been there for decades - since there has been a corporate income tax. It's not Bush's doing.

 

The incentive exists because the US taxes corporations at rates higher than most other countries. According to the Institute for International Economics, the effective rate for US corporations was just over 30% in 2002, while mainland China's effective corporate rate was only 11.3%, Britain's 18.2%, Mexico's 15.1% and Indonesia's a miniscule 0.2%.

Furthermore, the US also attempts to tax money that US-based companies earn in other countries, but only after those profits are brought back to the US. That means profits that remain overseas, perhaps invested in new factories in low-tax countries, never get taxed at the higher US rates. And that's been true through both Democratic and Republican administrations.

[Guest Z-rific]

I never said Bush was responsible for "tax breaks" for outsourcing. The loophole has been around for many Preisdents. Communication technology has allowed an environment that will cause outsourcing to grow at a much higher rate and we need to fix the loophole now.

 

I'm not saying Kerry will and Bush wont, but I like my chances on this issue with Kerry.

 

I stand by my thought that the savings from the outsourcing companies stay overseas and do not help our economy at all.

 

http://techpolicy.typepad.com/tpp/2004/03/tax_breaks_for_.html

[JMortensen]

Corporate taxes are really a diversion by the Kerry campaign. Besides, he's proposed a one year tax "holiday" isn't that right? If you told me my business could move to CA and have a one year tax holiday (small scale example), I'd tell you to shove it. One year of low taxes is not worth the hassle for these giant corporations to move production facilities back to the US. They wouldn't even have the manufacturing plant designs done before the tax holiday was over.

 

It's the WAGES that drive outsourcing. Kerry wants to increase the minimum wage and the union bosses could give his proctologist up to the minute reports. I don't think Kerry is going to be much help with respect to wages. No politician is.

 

I stand by my thought that the savings from the outsourcing companies stay overseas and do not help our economy at all.

 

As Rage Against the Machine once said "F*** the G ride, I want the machines that are making em." To that end, help YOUR economy by buying stock in the "Evil Empire". That's my best suggestion. Or start your own business and outsource your own manufacturing needs and become a more integral part of the "Evil Empire". Some other ideas: get a job in the service industry or manufacture something that has a very small niche market that is relatively expensive so that it isn't profitable to move offshore.

[johnc]

A few of the Democrats voting for Bush and why (I'll let someone else compile a list of Republicans voting for Kerry):

 

http://www.timesonline.co.uk/article/0,,2092-1312869_1,00.html

 

http://www.frontpagemag.com/Articles/ReadArticle.asp?ID=11686

 

http://www.weeklystandard.com/Content/Public/Articles/000/000/003/309nqnas.asp

[johnc]

And here's an article from today's WSJ that discusses taxes and labor markets:

 

Why Do Americans Work More Than Europeans?

 

By EDWARD C. PRESCOTT

October 21, 2004; Page A18

 

Last week, The Wall Street Journal published a story describing a new method of measuring a nation's progress – "gross national happiness." Maybe it's because we're nearing the end of an election season, but one hopes that this indicator does not catch on. Of all the promises that candidates find themselves making, and of all the problems they pledge to fix, one shudders at the notion of pledges to make us happier. The mind reels at the thought of the ill-conceived policies that would be concocted if the stated goal were to increase gross national happiness. It's hard enough to make everybody more prosperous, educated and healthy, but imagine if the government was responsible for keeping you in a good mood. And just think about the data problems.

 

I mention this not to poke fun at the idea of happiness. Indeed, our Constitution, in its elegant wisdom, allows for individuals to pursue happiness. But individual pursuit is far different from the aggregate management of happiness. This point is at the core of how we should think about many government policies, especially tax policy, which is the subject of this essay.

 

* * *

Let's begin by considering a commonly held view which says that labor supply is not affected by tax rates. This idea holds that labor participation would remain steady when tax rates are either raised or lowered. If you are a policy maker and you subscribe to this, then you can confidently increase marginal tax rates as high as you like to attain the revenues you desire. Not only that, but you can move those tax rates up and down whenever you like and blithely assume that this will have no effect on output.

 

But economic theory and data have come together to prove this notion wrong, and we have many different laboratories -- or countries -- in which we can view live experiments. The most useful comparison is between the U.S. and the countries of Europe, because these economies share traits; but the data also hold when we consider other countries (more on those later).

 

This issue is encapsulated in one question that is currently puzzling policy makers: Why do Americans work so much more than Europeans? The answer is important because it suggests policy proposals that will improve European standards of living (which should give a boost to its gross national happiness, by the way). However, an incorrect answer to that question will result in policies that will only exacerbate Europe's problems and could have implications for other countries that are looking for best practices.

 

Here's a startling fact: Based on labor market statistics from the Organization for Economic Cooperation and Development, Americans aged 15-64, on a per-person basis, work 50% more than the French. Comparisons between Americans and Germans or Italians are similar. What's going on here? What can possibly account for these large differences in labor supply? It turns out that the answer is not related to cultural differences or institutional factors like unemployment benefits, but that marginal tax rates explain virtually all of this difference. I admit that when I first conducted this analysis I was surprised by this finding, because I fully expected that institutional constraints are playing a bigger role. But this is not the case. (Citations and more complete data can be found in my paper, at http://www.minneapolisfed.org.)

 

Let's take another look at the data. According to the OECD, from 1970-74 France's labor supply exceeded that of the U.S. Also, a review of other industrialized countries shows that their labor supplies either exceeded or were comparable to the U.S. during this period. Jump ahead two decades and you will find that France's labor supply dropped significantly (as did others), and that some countries improved and stayed in line with the U.S. Controlling for other factors, what stands out in these cross-country comparisons is that when European countries and U.S. tax rates are comparable, labor supplies are comparable.

 

And this insight doesn't just apply to Western industrialized economies. A review of Japanese and Chilean data reveals the same result. This is an important point because some critics of this analysis have suggested that cultural differences explain the difference between European and American labor supplies. The French, for example, prefer leisure more than do Americans or, on the other side of the coin, that Americans like to work more. This is silliness.

 

Again, I would point you to the data which show that when the French and others were taxed at rates similar to Americans, they supplied roughly the same amount of labor. Other research has shown that at the aggregate level, where idiosyncratic preference differences are averaged out, people are remarkably similar across countries. Further, a recent study has shown that Germans and Americans spend the same amount of time working, but the proportion of taxable market time vs. nontaxable home work time is different. In other words, Germans work just as much, but more of their work is not captured in the taxable market.

 

I would add another data set for certain countries, especially Italy, and that is nontaxable market time or the underground economy. Many Italians, for example, aren't necessarily working any less than Americans -- they are simply not being taxed for some of their labor. Indeed, the Italian government increases its measured output by nearly 25% to capture the output of the underground sector. Change the tax laws and you will notice a change in behavior: These people won't start working more, they will simply engage in more taxable market labor, and will produce more per hour worked.

 

This analysis has important implications for policy -- and not just for Europeans, but for the U.S. as well. For example, much has been made during this election season about whether the current administration's tax cuts were good or bad for the economy, but that is more a political question than a policy consideration and it misses the point. The real issue is about whether it is better to tweak the economy with short-lived stimulus plans or to establish an efficient tax system with low tax rates that do not change with the political climate.

 

What does this mean for U.S. tax policy? It means that we should stop focusing our attention on the recent tax cuts and, instead, start thinking about tax rates. And that means that we should roll back the 1993 tax rate increases and re-establish those from the 1986 Tax Reform Act. Just as they did in the late 1980s, and just as they would in Europe, these lower rates would increase the labor supply, output would grow and tax revenues would increase.

 

Now, might there be a small increase in debt as we move to a better tax system? Sure, but remember that the most important measure of debt is privately owned government debt as a percent of gross national income, which has been flat over the past three years. Also, there is a sure-fire way to handle this increase in debt, and that would be to cut expenditures. Actually, there is another way to handle it, and that would be to pray to the Gods for another high-tech boom and the debt would go "poof," and we'll praise whoever is president for being fiscally responsible.

 

Some say that the 1993 tax-rate hike was responsible for erasing this country's debt problems because it increased government revenues. This is false. The ratio of U.S. debt to gross national income continued to increase in the years following those rate hikes and did not fall until the fortuitous boom that occurred in the late '90s. The high-tech boom meant that people worked more, output increased, incomes climbed and tax revenues followed suit. You cannot tax your way to that sort of prosperity. Imagine the outcome of the late-'90s boom if tax rates had been lower. And by the way, lower tax rates are good for all taxpayers. We're barking up the wrong tree if we think that "taxing the rich" will solve all our problems. You know who these rich people are? They're often families with two professional wage-earners. If you tax that family too much, one wage-earner will drop out, and that's not only bad for the income of that family but also for the output of the whole economy -- and will result in lower tax revenues.

 

Also, we need to get away from thinking of the rich as some sort of permanent class. Many of the individuals who show up on annual millionaire lists, for example, are people who happened to have a good year and who may never appear on that list again. Consider people who worked hard for many years and built a successful business that finally goes public. The big capital gain they realize that year is really compensation for the uncompensated effort they put into building the business. They should not be penalized for their vision and tenacity. If we establish rules that punish the winners, entrepreneurs will take fewer risks and we will have less innovation, less output, less job growth. The whole economy suffers under such a scenario -- not just those few individuals who are taxed at a higher rate. And this doesn't just involve the Googles and Apples and Microsofts, but countless other companies that start small and end up making large contributions to the economy.

 

The important thing to remember is that the labor supply is not fixed. People, be they European or American, respond to taxes on their income. Just one more example: In 1998, Spain flattened its tax rates in similar fashion to the U.S. rate cuts of 1986, and the Spanish labor supply increased by 12%. In addition, Spanish tax revenues also increased by a few percent.

 

And that brings us back to our framing question about the labor supplies of the U.S. and Europe: The bottom line is that a thorough analysis of historical data in the U.S. and Europe indicates that, given similar incentives, people make similar choices about labor and leisure. Free European workers from their tax bondage and you will see an increase in gross domestic product (oh, and you might see a pretty significant increase in gross national happiness, too). The same holds true for Americans.

 

Mr. Prescott is co-winner of the 2004 Nobel Prize in Economics, senior monetary adviser at the Federal Reserve Bank of Minneapolis and professor of economics at Arizona State University.