There is a fallacy that lowering taxes will reduce the money businesses ask for goods or services. Sadly they will still charge wht the market will bear and just pocket any extra money there no assurance that they will create jobs.
Prices move. I paid $200 for a computer display three weeks ago that would have cost me $500 three years ago. The same forces which caused this change in price would cause prices to move if the tax structure changed.
Would arbitrage even exist with proper normalization on a temporal database, imposed across the entire market?
The simplest example of arbitrage is spot FX arbitrage. This is when (for instance) $1 is trading for 100 yen in the US, but $1 is trading for 101 yen in Japan. Now trivially that form of arbitrage would be eliminated if you globally fixed the exchange rate, which I think is what you're saying.
But what is the "right price" for dollars in yen? What price would you fix to?
The arbitrageur doesn't really care - the arbitrage opportunity exists, which in this case is to buy dollars in the US and sell them in Japan - the price goes up in the US, and the price goes down in Japan until they're equal and the arbitrage opportunity is eliminated.
The reason that no one can come and say "It should be 100.5 yen" with certainty or "It should be 100.25 yen" with certainty is because as arbitrageurs make this trade, the price may rise faster in the US than it falls in Japan, or vice versa. No one can say for sure which because this is a reflection of the fundamental values of yen and dollars, which is (again) a hugely complex issue beyond the scope of arbitrage. Arbitrageurs let the market figure that one out.
The numbers on a company's balance sheet, the trustworthiness of its individual decisionmakers, inventory, past performance, performance relative to its industries, etc. are all hard data. The lack of availability of a great deal of data is legal and political (not necessarily for reasons I disagree with). A fundamental understanding of the industry (including its future) is of course going to be a lot more difficult to model, but I'm not sure how much of a concern that will be if so much cruft is excised from the system by design.
Much of this data is out there. There is an entire industry (Bloomberg, Thomson Reuters, etc) which has formed to provide it. Financial services companies thrive on information and have strong incentives to get it. Now if you think there still isn't enough information out there, fine - then the challenge is to increase transparency. As someone who works at a quant firm which crunches numbers, I'd love to have every receipt from every customer on earth on our machines.
But even if we had that data, we would not be able to come up with some definitive model for valuing a company's price or evaluating its creditworthiness. Maybe some day someone will, but at the moment, no. This remains an open question because projecting market conditions is, again, hugely complex. What we have now is decentralized, and this is a tremendous virtue. The firms with the best models - whether they're from computers or from people crunching balance sheets - win. If and when some firm can replace its people with a computer good enough to value a company, great, but if that happens it will happen organically.
The alternative you're suggesting is to place all central economic decision-making into the hands of a computer model which flatly doesn't exist. The financial system that we have, and that I support, strives toward improving
its models organically; if we get there, we get there.