{"id":5179,"date":"2010-11-09T09:20:38","date_gmt":"2010-11-09T09:20:38","guid":{"rendered":"http:\/\/scienceblogs.com\/principles\/2010\/11\/09\/calculus-saves-the-economy\/"},"modified":"2010-11-09T09:20:38","modified_gmt":"2010-11-09T09:20:38","slug":"calculus-saves-the-economy","status":"publish","type":"post","link":"http:\/\/chadorzel.com\/principles\/2010\/11\/09\/calculus-saves-the-economy\/","title":{"rendered":"Calculus Saves the Economy!"},"content":{"rendered":"

I’m taking a bit of flak in comments to my silly Bob Dylan post from Sunday<\/a>, with various right-wingers spontaneously popping in to tell me that JFK cut taxes. My initial reaction to this is to think that supposing a perfect equivalence between JFK cutting the top rate from 90% to 70% during a time of relative peace and prosperity and our current economic scenario is yet another demonstration of the fine grasp of historical and mathematical reasoning that makes the Tea Party crowd such a treat. <\/p>\n

But, then, it occurred to me that maybe their claim is that it’s the act<\/em> of cutting taxes that spurs economic growth, and that the initial and final tax rates are not important in and of themselves. In which case, I think I see a foolproof plan to achieve infinite economic growth.<\/p>\n

See, if it’s the act of cutting taxes that matters, not the start and end points, then clearly, you don’t want to move from the current economic hellscape of a 35% top rate (according to Wikipedia, anyway<\/a>) to whatever the optimum tax rate would be– not zero, because if we had zero taxes, we wouldn’t have the money to fund futile foreign wars, and we couldn’t have that, but some very small rate that we’ll call ε– in a single step. Clearly, you would be better off splitting that cut into two smaller cuts, each of:<\/p>\n

\n

K=(R-ε)\/2<\/p>\n<\/blockquote>\n

(where K is the amount you reduce the tax rate and R is the current rate). Cut taxes once this year, and reap the benefits of magic economic growth, and again next year, and you’ll get twice the growth. It’s a win-win.<\/p>\n

But it gets better…<\/p>\n

<\/p>\n

If two cuts are good, then three would be even better. Cut the rate by<\/p>\n

\n

K=(R-ε)\/3<\/p>\n<\/blockquote>\n

for each of the next three years, and you get three<\/em> years of economic growth. And, of course, being savvy math-capable types, you can immediately see where this is going. If each tax cut gives you economic growth, than you can guarantee N years of increased growth by cutting the rate by:<\/p>\n

\n

K=(R-ε)\/N<\/p>\n<\/blockquote>\n

each year for the next N years.<\/p>\n

Like a good physicist, of course, I immediately recognize that that N in the denominator gives us the opportunity to take the limit as N goes to infinity, effectively turning the sum of cuts into an integral. In which case, we can generate infinite<\/em> economic growth. The tax rate will asymptotically approach ε, but the economy will increase without limit. Soon, we’ll control the economic resources of the entire Virgo cluster, and we’ll be able to build particle accelerators to probe the Planck scale using change found in the couch.<\/p>\n

You know, I’ve more or less resigned myself to the fact that I’ll never win a Nobel Prize in Physics, but the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel<\/a> may yet be mine!<\/p>\n

Or, you know, the “Kennedy was in favor of cutting taxes!” argument is a bunch of crap generated by people with a grasp of historical context that would embarrass the average ornamental carp. I know which one I think is more likely.<\/p>\n","protected":false},"excerpt":{"rendered":"

I’m taking a bit of flak in comments to my silly Bob Dylan post from Sunday, with various right-wingers spontaneously popping in to tell me that JFK cut taxes. My initial reaction to this is to think that supposing a perfect equivalence between JFK cutting the top rate from 90% to 70% during a time… Continue reading Calculus Saves the Economy!<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"1","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,28,81,24],"tags":[],"class_list":["post-5179","post","type-post","status-publish","format-standard","hentry","category-math","category-politics","category-economics_1","category-silliness","entry"],"_links":{"self":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts\/5179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/comments?post=5179"}],"version-history":[{"count":0,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/posts\/5179\/revisions"}],"wp:attachment":[{"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/media?parent=5179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/categories?post=5179"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/chadorzel.com\/principles\/wp-json\/wp\/v2\/tags?post=5179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}