The Great Recession, Lanaflation, and the Great Tax Debate

Day 830, 22:35 • Published in USA United Kingdom • by Devoid

The economy has dominated the public dialogue lately, and for good reason. Things aren't like they used to be, and people don't get it. Or they think they get it, and come up with their own brilliant bad ideas. Stop yourself. We have people who know this stuff. I don't presume to tell the JCS how to run a military campaign, but I know a thing or two about economic policy. Let me break it down for you.




I bet she'd do it.


Everybody knows Lana is sucking gold out of the economy at a prodigious rate. But in economic terms, what does this mean? Lana is an admin-induced deflationary spiral, and a big one. In simpler terms, since everybody wants more gold to spend on Lana, the value of gold relative to everything else is going to increase. That's just simple supply & demand; demand for gold increases, so the price of gold increases. But no matter what, unless the admins change something, Napoleon training is still 1.8 gold. That price is fixed, so the price of everything else falls. Guns, houses, food, iron, wages. I bet you've noticed that you aren't making what you used to, and maybe you're mad.


I HAVE MANY ANGER

At a glance, it sure looks like you're making less. But take a closer look. Your nominal wage might be lower, but everything else is so cheap. Prices for many things are literally half what they were a few weeks ago. So are you really so poor? Gold "costs" more, in that you probably make less in terms of gold than you did a few weeks ago. But those $2 guns sure are nice.




What, you aren't satisfied? There is no pleasing you? Not to put too fine a point on it, but short of trying to talk everybody out of using Lana, there's no helping it. Go treat yourself to a 42 cent cheeseburger. Life is not so bad.


Mmmmm.




And onward to taxes. I've heard a lot of talk in favor of raising import taxes, or tariffs. On its face it sounds like a good idea. We can't compete on price with those nasty Finns! They're pushing our companies out of business, and robbing us blind!


I googled "Finland evil" and got this. Effing scary.


Well, no they aren't. This benefits us, and I'll tell you why (if you want a more in-depth analysis, refer to this article I wrote a little while back). The short version is that while our domestic companies would benefit, and we might make a little government revenue, our consumers on the whole would suffer due to increased prices, and this harm would outweigh the benefits. Anybody with a cent of economic knowledge can tell you that competition pushes prices down and forces efficiency. So it stands to reason that if you push those damn foreigners out of our market, our prices will rise. But this is not so bad, you say! Our wages will rise! Well yes, they will rise. But prices will rise more. I alluded to purchasing power when discussing Lana earlier, and the same principle applies. If the world average wage is $5 and the world average gun price is $2, and you're only making $3 but guns are only $1 in the US, then you're doing better here. You have more purchasing power. Why would your purchasing power fail to keep pace in a country with less trade? Because you'd be buying from less efficient companies. The reason that foreign companies sell us stuff and compete on our markets is because they can do so at a cheaper rate than us, and still make a profit. Obviously they aren't going to spend 20 gold on an export license unless they can make good use of it. They have a comparative advantage, and they take advantage of it. Likewise with raw materials; imported oil lets us make cheaper moving tickets for our consumption. And even if we're importing oil, that doesn't mean we don't also have profitable domestic oil companies shipping Texas Tea out to Broatia and Bromania.


More like taking advantage of US!


Believe it or not, there isn't a "winner" and a "loser" in the world of international trade. It's mutually beneficial. A transaction simply isn't going to take place if it doesn't benefit both sides. If I'm a Finnish gun company owner, I won't sell to the US unless I can get a better price here than in Finland; if I'm a US gun buyer, I'm not going to buy a Finnish gun unless the price is as good or better than the other ones on the market. Also, did I mention that most of those who export to us are our allies? You don't hate our allies, do you?


Just like back in Little League, there are no losers.


Speaking of things that you damn well better not hate, you don't hate our troops, do you? Our military buys guns here. Push out foreign competition and they'll pay more, which means less guns, which means less damage. And it's not just guns. If I can heal up to 50 wellness a day, why not just skip buying food, buy no gifts, have no house, and skip a battle a day to make up the loss? Well, some people (rea😛 redcoats in disguise) might do this, but most would rather stand and deliver another blow for their country. So they buy food, and have a house, and maybe use gifts. So in essence, everything sold on the market translates into damage on the battle. Raise the price of these things, and less gets sold. And less damage gets done.

So yes, raising import tariffs will endanger national security.



No, U.


While we're talking taxes, let's talk income taxes. The subject of raising these taxes has come up recently, especially within the hallowed halls *cough* of Congress. Income taxes make up the bulk of our revenue, and the vast bulk of our budget goes toward the military and national defense. The proposals to raise it have a pretty straightforward argument: more money in the government's hands turns into a larger, more powerful military. Of course, the government never wants to cut taxes...or do they? I was surprised, and frankly somewhat disturbed, to see a prominent presidential candidate suggest that we slash income taxes in half, to 10%. While everyone would like to have some extra pocket change, the blow to government revenue from this would be enormous, and as such the hit to military funding would be enormous. The research shows that the military does a far better job turning money into damage than the average citizen, who has an affinity for sitting on it and not spending it.


What we dream of. Note that it's all gold, not stuff.


*looks at the 14g and 135 USD just sitting in his account* Hey, we all do it. But when it comes to getting damage done where we need it when we need it, there's no comparison. Unlike many issues, such as the import tax issue, whether or not to raise income taxes is not a matter of good versus bad policy; it's a matter of personal view, whether you believe the citizens should pay more to support a stronger military. But cutting income taxes is frankly dangerous.


And tacky.


If you're still with me, I applaud your focus. I hope this made some sense to you. So then, you ask me, what is your solution? All these fancy ideas are nice, but how are we going to fix this situation? Our economy is dying!




We aren't the only ones suffering from Lanaflation. But, believe it or not, we aren't suffering as badly as everyone else, because we can import all that wonderful cheap stuff from across the world. If Lanaflation can't be stopped, and changing taxes won't help anything, what can we do?

Well, there isn't much to do. If you were watching, you'd have noticed that prices plummeted before wages did. But wages have taken the jump as well now. What does this mean? It means we're reaching the light at the end of the tunnel. We're nearing an equilibrium, where wages and prices match up again, and people can prosper. Gold will be worth more relative to everything else, but life will be quite liveable. The only major change is that all the numbers will be smaller. Purchasing power shall remain king.

[img]http://patterico.com/images/GoodtoBetheKing.JPG[/img]
Look how happy that guy is. It is good to be the king!