Trajan
conscientia mille testes
Spending Review: Osborne wields UK spending axe
Up to 500,000 public sector jobs could go by 2014-15 as a result of the cuts programme, according to the Office for Budgetary Responsibility.
Mr Osborne has not set out in detail where the jobs will go but he admitted there will be some redundancies in the public sector, which he said were unavoidable when the country had run out of money.
BBC News - Spending Review 2010: George Osborne wields the axe
now lets see if we can replicate that here....
Sometimes the universe is a funny place, there I was, on the throne this morning, reading this article ( below), and when I came to work and began my usual morning swing through the news and sites I check, came up on the above news,
( please take 5 and read the article, its a one pager) ;
Austerity Agonistes
Why left-wing economists warnings against austerity programs are wrong
Veronique de Rugy
October 2010 issue
snip
concluded in a 2010 report that cutting annual spending by 1 percent triggers a net 0.6 percent in economic growth. As we will see below, this is a good deal compared to the $1.10 reduction in GDP we get for each $1 spent by the government to stimulate the economy. Lower spending reduces the fear of higher taxes, which leads to an increase in consumer and business demand and growth.
The notion that austerity is bad and stimulus is good rests on the Keynesian theory that if government spends a lot of money, that money will create more value in economic growth. This purported increase in gross domestic product is what economists call the multiplier effect. Its a nice story, but like most fairy tales, it has scant basis in reality.
In a 2010 paper published by George Mason Universitys Mercatus Center (where I work), economists Robert Barro and Charles Redlick showed that in the best-case scenario, a dollar of government spending produces much less than a dollar in economic growthbetween 40 and 70 cents. If that was the rate of return on our private-sector investments, America would soon cease to be a leading economic force.
Barro and Redlick also looked at the economic impact of raising taxes to pay for spending increases. They found that for every $1 in tax-financed spending, the economy actually shrinks by $1.10. In other words, greater spending financed by tax increases damages the economy. The stimulus isnt working, because the economic theory it is based on is fundamentally flawed.
ANNNNNDDDDD....
the money shot-
A 2002 paper in the Economic Policy Journal, written by the French economists Yann Algan, Pierre Cahuc, and Andre Zylberberg, looked at the impact of public employment on overall labor market performance. Using data for a sample of OECD countries from 1960 to 2000, they found that, on average, the creation of 100 public jobs eliminated about 150 private-sector jobs, decreased by a slight margin overall labor market participation, and increased by about 33 the number of unemployed workers. Their explanation was that public employment crowds out private employment and increases overall unemployment by offering comparatively attractive working conditions. Basically, public jobs, especially ones that also exist in the private sector in fields such as transportation and education, offer higher wages and benefits, require low effort, and therefore crowd out many private jobs. When these new employees are paid with taxes it negatively impacts the economy.
conclusion at-
Austerity Agonistes - Reason Magazine
Up to 500,000 public sector jobs could go by 2014-15 as a result of the cuts programme, according to the Office for Budgetary Responsibility.
Mr Osborne has not set out in detail where the jobs will go but he admitted there will be some redundancies in the public sector, which he said were unavoidable when the country had run out of money.
BBC News - Spending Review 2010: George Osborne wields the axe
now lets see if we can replicate that here....Sometimes the universe is a funny place, there I was, on the throne this morning, reading this article ( below), and when I came to work and began my usual morning swing through the news and sites I check, came up on the above news,
( please take 5 and read the article, its a one pager) ;
Austerity Agonistes
Why left-wing economists warnings against austerity programs are wrong
Veronique de Rugy
October 2010 issue
snip
concluded in a 2010 report that cutting annual spending by 1 percent triggers a net 0.6 percent in economic growth. As we will see below, this is a good deal compared to the $1.10 reduction in GDP we get for each $1 spent by the government to stimulate the economy. Lower spending reduces the fear of higher taxes, which leads to an increase in consumer and business demand and growth.
The notion that austerity is bad and stimulus is good rests on the Keynesian theory that if government spends a lot of money, that money will create more value in economic growth. This purported increase in gross domestic product is what economists call the multiplier effect. Its a nice story, but like most fairy tales, it has scant basis in reality.
In a 2010 paper published by George Mason Universitys Mercatus Center (where I work), economists Robert Barro and Charles Redlick showed that in the best-case scenario, a dollar of government spending produces much less than a dollar in economic growthbetween 40 and 70 cents. If that was the rate of return on our private-sector investments, America would soon cease to be a leading economic force.
Barro and Redlick also looked at the economic impact of raising taxes to pay for spending increases. They found that for every $1 in tax-financed spending, the economy actually shrinks by $1.10. In other words, greater spending financed by tax increases damages the economy. The stimulus isnt working, because the economic theory it is based on is fundamentally flawed.
ANNNNNDDDDD....
the money shot-
A 2002 paper in the Economic Policy Journal, written by the French economists Yann Algan, Pierre Cahuc, and Andre Zylberberg, looked at the impact of public employment on overall labor market performance. Using data for a sample of OECD countries from 1960 to 2000, they found that, on average, the creation of 100 public jobs eliminated about 150 private-sector jobs, decreased by a slight margin overall labor market participation, and increased by about 33 the number of unemployed workers. Their explanation was that public employment crowds out private employment and increases overall unemployment by offering comparatively attractive working conditions. Basically, public jobs, especially ones that also exist in the private sector in fields such as transportation and education, offer higher wages and benefits, require low effort, and therefore crowd out many private jobs. When these new employees are paid with taxes it negatively impacts the economy.
conclusion at-
Austerity Agonistes - Reason Magazine
