Friday, October 31, 2008

Trickle down econmics of food (part I)

Economics is very complex, and no one understand it totally. That is why the stock market is a gamble ground for most people, because no one can understand the entire economics situation.

Trickle down economics is the idea of reducing taxes of rich people and hope it will flow down to everyone. It is basically people who hate rich people call Supply side economics.

All economics ideas works to a certain extend. For example, if our food supply can't met demand by a large amount, most of the governments in the world will melt down, and people who survive will be depend on "Loot economics", basically the strong will win.

Now assume the food supply just meets demand. At this point, the most important thing on everyone's mind will be food. All the other stuff (Gold, entertainment) doesn't matter. The best type of government will be communist government. Because if someone became rich, that riches could mean death to others.

In case of food supply far exceeds demand, i.e. modern US/EU. There is a balance. It is better to have a progressive tax system so riches pays more, but it is hard to calculate how much. I think it is best to determine by experiment, but start from lower brackets. One thing you need to avoid is, never tax too much. Taxing has a effect of stamp creation. Most of us are honest people, and no matter rich or poor, we deserve the same treatment. To me (or the libertarian thinking), as long as the rich man's riches doesn't affect you physically in anyway, let them be rich. The more the wealth are created, the more the chance you will get some of them, and you might be rich one day too. However don't put your hope too high, because the system will always be pyramid shaped, the only difference is in developed countries, the bottom layer is actually enjoyable while in not so developed countries, even the middle layer could be rather bad.

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