Hi, I know it may seem abit weird but when people talk about economics in general and numbers, I get lost in the conversation. I have no basic concept of economics. When reading about private equity firms, capitalism or even a GDP data, it looks very confusing and so overwhelming. Could you recommend any good books that would help me educate myself on this matter? I think it would help me as I want to eventually start my own business. I’ve read abit of freakonomics by steven d. Levitt and the most obvious one rich dad poor dad

Thanks :)

The following is how to increase GDP in the country:

If the government were to increase income tax and corporate tax by the same percentage (as to allow sole proprietorships and corporations to pay the same business profit tax) tax revenues would be raised to supplement a lower rate in the social security tax paid by employees. The lowered rate in this type of "payroll tax," will allow for increased income. Then the job market will go to equilibrium, thereby lowering employee costs. Because the jobs will pay less (due to the payroll tax decrease), more earnings and GDP will be gained. Furthermore, since there will be expansion in the economy, employee costs may possibly go up due to a change in quantity supplied in the cost curve. However, this increase in income will not decrease GDP nor earnings, because it is expected in the process.

Also note, more business profits will have to be taxed if businesses are to retain their increased state of aggregate revenues (GDP's consumption component). That is because earnings will go to equilibrium due to increased competition over earnings. This will in turn lower prices and lower the aggregate demand curve. And GDP will be lost. So, to keep the demand curve and cost curve from coming back to equilibrium, a business profit tax (such as the one explained above) should be implemented.

The following is how to increase GDP in a state (although it will hurt the Federal Reserve's capability to control inflation, and should only be used in desperate circumstances):

States that charge a destination-based sales tax have an advantage over those who do not. That is because a state can charge a sales tax to its citizens without losing exports due to high taxation. If a state ups its sales tax a percent, that state would need to lower its income a percent as well. This means that spending, to those who collect income (and not to those who rely solely on investments), will not change. Although it seems like nothing is gained, more tax revenues are gained. That is because the amount of money collected by a 1% gain in sales tax will almost always be more that the amount lost in a decrease of 1% in income tax. That is because employee income is 'baked into' the price of the good sold. And although, in some cases, income taxes will not be covered by sales taxes, it is most likely the case that they will. So, tax revenues are gained without a loss in consumer spending and without a loss in state exports.

If the good purchased costs 100$ and the sales tax is increased 1% (alongside a 1% decrease in income tax), 1$ in tax revenues is gained. Since income tax was reduced 1%, we'll say that 40 cents were lost in income tax revenue. In this example, 60 cents in tax revenue is made. Though this 60 cents can be given back to the citizens (making the total loss for non-income-earning people 40 cents), the 60 cents can be used in more interesting ways.

Since only about half the population in the US works, and since that half is already seeing a decrease in income taxes, it follows that income earners would be double-counted if they received the extra 60 cents. And if the extra 60 cents were given from income earners to people who do not work, that 60 cents would be doubled to 1.20$. Furthermore, since about 25% of the population are minor dependents, it follows that the 1.20$ is closer to 1.80$ for all other citizens who are not working nor a dependent minor.

It is easy to give the 1.80$ back to older citizens, people whom rely on fixed investment income, and other visitors and tourists who come into the state. The excess tax income can be given to local governments. Those local governments can use the tax income for decreases in property taxes that may be given to retiree neighborhoods, tourist areas, and even to those who are more likely to make investment income.

This is especially useful in states that have rail strikes (as well as a destination sales tax). In the case of union strikes, a state's GDP expansion will lead to higher wages. That is usually how a cost curve works. That is because the cost curve is upwards sloping due to stronger demands for labor. Furthermore, the excess tax revenues can easily be put into pension plans.

I wonder are there economic theories, or single models at least, explicitly about the relationship between local processes and global ones? Let me try to elaborate on my question to make it clearer

1. The theory of supply and demand is based on the assumption that individual entities, the producers and consumers make their own decision, 'locally' in the system, and the market coordinates these decision to some kind of 'global' optimum.
2. I know that Hayek talked about the self-organization of the market and the economy as a whole but are there mathematical models related to this? If so where?
3. The debate around free markets and capitalism vs. socialism revolves often around a similar question: How centralised/globalized should the economy be organized? If you consider the degree of centralization synomyous to what I consider 'global' here.
4. I wonder if there are models that treat the separation between local and global explicitly and may come up with an optimum even between local and global functionality.
5. This also could be interpreted concretely in terms of geographically local vs. geographically global. This would be one special case of what I refer to. Because if you consider local production, let us say somewhere in India, and it is connected somehow to consumption in Europe, then these two are vastly distant processes not only in terms of geography but in terms of functions/trade relationships in-between. How does the information being processed in the place in India affect the consumption in Europe? Is there a theory/models that relate these two (beyond like classical trade models like Heckscher-Ohlin, Ricardo etc.)? I seek novel theories in terms of dynamical system theory, optimal control perhaps etc.

I know this is still kinda vague and very general but I do not have more concrete thoughts at the moment.

what would a society where there is massive income and wealth inequality on a level worse than America but everyone including the poorest lowliest of paupers lives a life of complete and absolute luxury be like both socially and economically.

Poor countries accept foreign aid from rich countries in hopes of helping their economic struggle. All foreign aid is exchanged into the poor country's currency before it can be used within the poor country. That means that entities who are interested in the richer country's currency, are willing to exchange currencies in hopes of importing goods from the richer country. However, the trade deficit may create joblessness due to a rise in competition from imported goods.

When the aid is finally exchanged, it can be used to lower taxes within the poor country's government. However, if the business profit tax is not raised as well, people will form companies in order to gain the excess profits that arise from lowered taxation. The competition from the newly opened businesses will lower prices and bring profits back to equilibrium in time. And all that will be gained will be lost to unstable GDP, unstable consumption, and unstable price action.

Unstable prices and unstable GDP will lead to problems in the job market. That is because people will move in search of better living conditions, which will lead to less local and online business revenues, and people will lose their jobs.

If the business profit tax is implemented alongside receiving aid, there is potential to make more GDP and sustainable company earnings. However, the potential for a country to gain GDP and earnings is based solely on that country's job market. If a country cannot meet the demand of new jobs, that country will see a rise in wages and less GDP will be made.

If a country wanted to earn more GDP, it would need to lower payroll taxes and either gain the tax deficit back from aid or business profit taxes. However, if the job market cannot handle the increase in GDP potential, there is no sense in pursuing economic relief if the by-product is an unstable job market.

The job market is usually last to repair during economic uncertainty, and unemployment may lead to more unemployment.

So, between the choices of relying on aid and economic engineering, is aid worthless without a degree of economic engineering? Can economic aid hook a country on stable money while hurting a poor country's living standards?

I'd like to present to you a theory of decentralized government.

PDF: https://drive.google.com/file/d/18RL2nAklSdVsVv7mW5mM1EI3FsG5EKsA/view?usp=share_link

The theory itself is presented in Chapter 3.

Main features of democratic decentralization:

1. Non-monopolistic central banking.

Banking system with an unlimited number of democratically selected central banks.

2. Extending the stock market to small and medium sized firms.

Moving the burden of financing of boards of directors from companies to investors. 

Allowing investors the possibility of geographic localization for their portfolio.

Enabling small scale stock market infrastructure.

3. Fiscal Democracy

Illustration: There are three houses owned by persons A, B and C. They make an agreement to pay a construction agency to build a road. There are two construction agencies X and Y that are competing for the project. The budget for the project is m, each person must contribute m/3. Persons A, B and C vote on which construction agency gets the project. Let’s say A and B vote for X, and C votes for Y. The agreement says that if C doesn’t believe that X is going to deliver the project and the budget is going to be wasted, then C can invoke a special provision in the agreement. The provision says that if the project fails then A and B must both pay m/6 to C. If the project doesn’t fail then C must pay m/3 to X.

Suggest edits to the document:

https://docs.google.com/document/d/1K7Z0MgHVfIHEpDbZ3z1dOdvEyOgTC4z6ZJPYvA4v2eU/edit?usp=share_link

Join:

r/DecentraliseDemocracy

Although tariffs are essentially a sales tax placed on importers, importers are already taking 10% off the top. This means that either a reduction in an importer's commission or a reduction in tariffs will reduce competing domestic company earnings as well as displace domestic workers.

Although the US has implemented large tariff swings in the past, we will discuss what it means to make a small tariff swing and a small swing in importer commission. If a 0.066% reduction in tariffs occurs, the overall price that the importer sells at will be reduced 0.066%. This is because a tariff operates like a sales tax. That means that the good being sold will decrease its component of inflation by 0.066%, allowing people to spend more.

Historically, the US has had a 2% inflation mandate paired with an average nominal GDP growth of 3%. Using this correlation, I assume a 0.066% decrease in pricing increases the spending of a good by 0.1%. That means that spending will decrease in the competing domestic company by 0.1%, and reduce the need for workers by 0.1% as well.

Since a 0.1% increase in unemployment is generally normal for monthly swings, if follows that a 0.066% change in tariffs or import commissions will increase spending by about 0.1% without causing uncontrollable unemployment. Furthermore, since unemployment benefits last 6 months, it follows that displaced workers will probably find a new job with ease. And the process can begin again every 6 months.

However, increased spending from a 0.066% reduction in price can only occur for certain goods. For other goods, it cannot. Because the Federal Reserve is constantly keeping the inflation mandate at 2%, it follows that the economy can only decrease prices in PPI-listed goods without over-heating the economy. So, if all tariffs are decreased by 0.066% on PPI-listed goods and commodities, the cost of supplies will fall 0.066%, making the consumer-side good price fall by 0.066%, thereby increasing consumer spending by 0.1% indefinitely.

Since most of GDP is consumer spending, it follows that if tariffs are lowered 0.066% semi-annually, it will take 5 years to increase GDP growth to 4% from 3%. That is because the supply curve will be lowered periodically, thereby distancing it from the demand curve. And although competitors will try to move in to soak up excess profits, companies can retain their earnings alongside larger revenues if a corporate tax is raised enough to discourage competitors from moving in. The extra tax revenues can go to green energy technology. Thereby securing our future and allowing PE ratios to bloom without the restriction of future pitfalls.

Oil company shareholders should prefer lower prices and less profits. They should want lower priced oil so that their diversified portfolio can increase in earnings and revenues.

Furthermore, oil companies should want to invest in a green energy future. Because without a future, their companies are worth zero.

​

This is a link to a subreddit where I first commented on the phenomena:

https://www.reddit.com/r/politics/comments/yix801/comment/iulde3r/?utm_source=share&utm_medium=web2x&context=3

https://youtu.be/cZaClRiIHwA

What are assumptions and implications of the Keynesian and Euler equation for modelling consumption & does empirical evidence support the Euler equation based consumption function?

Ever since fixing the inflation mandate at 2%, the US has gone down a more predictable path. However, it makes no sense holding any note for longer than 1 year. That is because, most notes have interests that pay very little after the first year of inflation, and virtually nothing after 2 years.

If the treasury purchaser is not holding any note for more than 1 year, can it be said that all notes should be made into longer termed bonds? After all, the only reason the 50-year bond is not in circulation is because there is no demand. However, with the discontinuance of notes, bond demand would sky-rocket.

I only see a win-win here. The purchaser of the security does not mind to sell after 1 semi-annual coupon payment (regardless of the treasury's term), and the government gets to pay back much less than it borrowed when taking inflation into account. A 1000 dollar 50-year bond, will only cost the tax-payer 364 dollars at maturity (in today's dollars). A 60-year bond, 298 dollars. Although the coupon rate would be higher than that of any note, the yield curve is traditionally flatter towards the longer termed treasuries. So it makes money sense not to mind the higher coupon rates.

So why is this not done? Does anything else change in the economy other than the US receiving a more sustainable debt to GDP ratio? Though many metrics use treasury notes for calculations, can the availability of treasury notes be reduced significantly while still providing a market for the note? Does the volume of notes sold matter to these metrics? I am not proposing we rush into anything. We should just begin to make a slow switch.

There were talks in Washington of creating a 10% asset tax on the 260 (plus) trillion dollars of assets held by the public. That would bring back 26 trillion dollars to the Federal Reserve without having to reduce the central Banks's balance sheet.

Firstly, we only need a 5% asset tax to bring back the necessary amount of M1 money supply. Through both The Federal Reserve and Washington it can be done.

We only need to raise the reserve ratio until the money comes back in exchange for bank assets. Then, raise the capital gains tax to 5%. That will lower the demand for assets by 5%, and thus the price as well. And because everyone will be holding assets, those assets will be more in line with traditional trajectories.

In a potentially near future where many different kinds of human workers (say a moderate to large chunk of the working population) have been replaced by corporate worker robots that can do the job more efficiently than humans (no overtime pay, no bathroom breaks, no difference of opinion, etc), what do you think will happen to those that get replaced? What job markets might expand? What job markets might be created?

The pessimist in me says no universal basic income will be put into place any time soon particularly in the US, so take that into consideration.