Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget.
Interpretation
High taxation can hinder economic progress, while reducing taxes might better balance the budget over time.
In this quote, John Maynard Keynes suggests that excessively high taxation can be counterproductive, ultimately defeating its purpose of generating revenue. Instead, he posits that reducing taxes could lead to more sustainable economic growth and ultimately a more balanced budget if given sufficient time for its effects to manifest.
In practice
In a speech about fiscal policy, one might reference this quote to argue the importance of balanced taxation.
As time goes on, I get more and more convinced that the right method of investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is generally understood. Indeed, the world is ruled by little else.
The disruptive powers of excessive national fecundity may have played a greater part in bursting the bonds of convention than either the power of ideas or the errors of autocracy.
We will not have any more crashes in our time.
This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45 [Hayek provided historical background up to page 45; after that came his theoretical model], and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.
All taxes, except a 'lump-sum tax,' introduce distortions in the economy. But no government can impose a lump-sum tax - the same amount for everyone regardless of their income or expenditures - because it would fall heaviest on those with less income, and it would grind the poor, who might be unable to pay it at all.
That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.
Developing economies may not have much control over the headwinds that they face today, but that does not mean that they are powerless. Much can be done not just to sustain moderate growth but also to secure a more prosperous and resilient future.
Markets as well as mobs respond to human emotions; markets as well as mobs can be inflamed to their own destruction.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
Can we please agree that in the real world, corporations exist for one purpose and one purpose only - to make as much money as possible, which means cutting costs as much as possible?
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