Wednesday, June 16, 2010

Wow, the NY Times actually posted the following comment

of mine:
I agree that good government promotes job creation, but we cannot escape the laws of diminishing returns to scale. Taxes do create dead weight losses; government spending does crowd out private investment. Both of these factors may be increased for Pareto optimality, but not ad infinitum. There is a reason why no one can reasonably talk about 90% or 99% marginal tax rates, because everyone would stop working as result of such policy. Just as we needed to factor in the possibility of falling home prices in the last decade, we also need to consider the possibility of negative Keynesian multipliers. In sum, government can promote job creation until it gets too big and then it destroys jobs.

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