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September 24th, 2009 :: Permalink

Aloha ~
I would like to second Keahi's remarks. A society is judged on how they treat their most distressed members. I would rather error on this social policy by allowing a small percentage to cheat than see anyone go hungry. Food should not be an issue in America or Hawai'i. If I remember correctly, about 15% of Hawaiians are "food insecure" presently and this will likely go up with our struggling economy.

Yet there should be strict rules requiring that ONLY food be provided - no alcohol, cigarettes, etc. Second, there should be adequate job training programs for all members seeking assistance. This latter program is where costs begin to soar.

This is why our education system is so critical. It is much easier to reach and teach our keiki. By the time they become adults, retraining and teaching is simply prohibitively costly.

Obviously reducing barriers to entry in such programs makes administrative sense and it saves taxpayers money. On the other hand, relaxed policies allow more to cheat and that costs us all. It's a fine line and the solution is to continue these debates as we work on the best balance for all.

A*L*O*H*A

Second Post: September 30th, 2009 at 11:50 am

Aloha Kolea ~
That was an excellent analysis ... clearly I am only the student sitting in your sage shadow.

The principle that lower taxes will stimulate economic growth is attributed to Arthur Laffer. While he did not derive the original theory, he articulated this concept to leading conservative politicians, such as Dick Cheney and Donald Rumsfeld, during the Ford administration. Ronald Reagan made this a key component of his Supply Side approach during his presidency.

While there is a great deal of economic reality in Laffer's curve, economics works best in a controlled laboratory experiment. The proposition that reducing taxes particularly on the most rich will yield greater overall government revenues from taxes ASSUMES a closed economic system.

When Reagan reduced the marginal tax rates on the most wealthy, we all ASSUMED they would reinvest their additional funds back into the American economy. Yet theorists missed one critical component of human nature ... people who are good at making money, who are focused on making money, will likely invest their money where they can return the greatest gain. For many investors during this period, the U.S. wasn't the most promising market.

While America's leaders gambled that the most wealthy would reinvest in the U.S. market, and consequently, increase demand for labor and accelerate economic growth, wealthy investors were gambling with their new funds in overseas markets.

The result was declining tax revenues here at home that pinched federal programs while the economy continued to stagnate (keep in mind that Reagan was also pumping up U.S. military spending in our race with the Soviets). Wealthy investors scored nice returns on their money - on investments outside the country.

Many experts believe these policies aided the flight of U.S. capital and businesses to foreign markets and accelerated the globalization affects which you so eloquently detail.

Mahalo for your discussion ...

A*L*O*H*A