Economics

[Dad2three]

Yet if you decrease government spending, you necessarily decrease GDP

Because people can't spend and invest their own money without a huge government in DC spending trillions?

No. Because government expenditures on goods and services are one of the components of GDP.

And if the people kept the money, their expenditures on goods and services would also be a component of GDP.

Depends on who. If you mean the Romney class, no, they save and off shore the jobs there is no real growth with trickle down tax cuts too the rich, didn't Dubya show that?

 

[Dad2three]

The government could pay people $2 trillion a year to dig holes and another $2 trillion to fill them in. That would add $4 trillion to GDP.

Is that something you'd support?

Did you even read Ed's beef with the debt/GDP ratio? He thinks it's too high, yet he wants to decrease gov't spending. Necessarily this would decrease GDP. What I would or wouldn't do with boosting GDP is irrelevant to his self-defeating argument.

[
No. Because government expenditures on goods and services are one of the components of GDP.

Yup. It's only 18% of GDP. The biggest component is personal consumption which accounts for 69% of GDP and whose growth has been outpacing growth in government spending.

So Ed and Todd probably have more work to do before anyone should believe that gov't spending is having a net negative effect on GDP. If it does, it's not obvious from just looking at the data.

so does this mean tax and spend is the way to make an economy grow or shrink?

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory



The conclusion?

Lowering the tax rates on the wealthy and top earners in America do not appear to have any impact on the nation’s economic growth.

This paragraph from the report says it all—

“The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”

These three sentences do nothing less than blow apart the central tenet of modern conservative economic theory, confirming that lowering tax rates on the wealthy does nothing to grow the economy while doing a great deal to concentrate more wealth in the pockets of those at the very top of the income chain.


Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory-GOP Suppresses Study - Forbes

 

[Toddsterpatriot]

So ed asks a really naive question:

so does this mean tax and spend is the way to make an economy grow or shrink?

Neither, me boy. It means nothing. Without knowing the condition of the economy. R Reagan found that tax and spend really, really helped the economy AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%. Hoover found that no new taxes and cutting spending made things go the wrong way, driving the ue rate from under 4% to 23% in four years. Roosevelt drove the ue rate down by increasing taxes and spending stimulatively.
But, me poor ignorant con tool, the answer is not as simple as your simple mind would like it to be. Kinda like your shorts. Depends.

AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%

I remember Reagan cutting taxes, when did he cut spending?

Hoover found that no new taxes and cutting spending made things go the wrong way,

When did Hoover cut spending?

 

[Rshermr]

And if the people kept the money, their expenditures on goods and services would also be a component of GDP.

Right. If their propensity to consume is 100%. Which it is not. And never has been. Which is why gov consumption is a much more stimulative factor than tax cuts. Tax cuts often go to savings, particularly among the more wealthy. Gov expenditures are stimulative. Private spending is stimulative. Some, in both cases are more stimulative than others.
Over time, cutting taxes has been proven to be less stimulative than government expenditures in most cases. To my knowledge, we have no gov projects that call for digging and then filling in holes. It would be stimulative, but the multiplier would be low. However, if you did what the gov wants to do and developed programs to make or repair infrastructure, it would be quite stimulative.
Basic economics, though not libertarian or austrian economics.
By the way, building or repairing infrastructure is not done by the gov. It is done, of course, by the private sector. The private sector is paid, sector eployees are paid, they buy more stuff, which provides more money to more private sector folks. Which should scratch your itch about private sector involvement. And, it makes economies take off, based on the economic history of this country. Cutting taxes to put more money in the hands of the private sector NEVER does in bad economic times (times of high unemployment).

Right. If their propensity to consume is 100%. Which it is not.

You must have forgotten that savings and investment are also part of GDP.

No, not at all. Investment is, depending on the type of investment. In general, business investment is mostly part of gdp, but private investment is generally not. However, as I recall savings is not. And your point is??

 

[JimmieD]

The government could pay people $2 trillion a year to dig holes and another $2 trillion to fill them in. That would add $4 trillion to GDP.

Is that something you'd support?

Did you even read Ed's beef with the debt/GDP ratio? He thinks it's too high, yet he wants to decrease gov't spending. Necessarily this would decrease GDP. What I would or wouldn't do with boosting GDP is irrelevant to his self-defeating argument.

[
No. Because government expenditures on goods and services are one of the components of GDP.

Yup. It's only 18% of GDP. The biggest component is personal consumption which accounts for 69% of GDP and whose growth has been outpacing growth in government spending.

So Ed and Todd probably have more work to do before anyone should believe that gov't spending is having a net negative effect on GDP. If it does, it's not obvious from just looking at the data.

so does this mean tax and spend is the way to make an economy grow or shrink?

It means you should abandon your self defeating ideas about lowering the debt/GDP ratio by doing things that would lower the denominator of the ratio. It appears you have abandoned it too - I don't see you defending it anymore.

 

[EdwardBaiamonte]

Did you even read Ed's beef with the debt/GDP ratio? He thinks it's too high, yet he wants to decrease gov't spending. Necessarily this would decrease GDP. What I would or wouldn't do with boosting GDP is irrelevant to his self-defeating argument.



Yup. It's only 18% of GDP. The biggest component is personal consumption which accounts for 69% of GDP and whose growth has been outpacing growth in government spending.

So Ed and Todd probably have more work to do before anyone should believe that gov't spending is having a net negative effect on GDP. If it does, it's not obvious from just looking at the data.

so does this mean tax and spend is the way to make an economy grow or shrink?

It means you should abandon your self defeating ideas about lowering the debt/GDP ratio by doing things that would lower the denominator of the ratio. It appears you have abandoned it too - I don't see you defending it anymore.

conservative position is that the less tax and spend interference the higher GDP will be. Interference was high in USSR, East Germany, Red China and so they had about 20% of our standard of living. Do you understand now?

 

[Rshermr]

So ed asks a really naive question:

so does this mean tax and spend is the way to make an economy grow or shrink?

Neither, me boy. It means nothing. Without knowing the condition of the economy. R Reagan found that tax and spend really, really helped the economy AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%. Hoover found that no new taxes and cutting spending made things go the wrong way, driving the ue rate from under 4% to 23% in four years. Roosevelt drove the ue rate down by increasing taxes and spending stimulatively.
But, me poor ignorant con tool, the answer is not as simple as your simple mind would like it to be. Kinda like your shorts. Depends.

AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%

I remember Reagan cutting taxes, when did he cut spending?

Hoover found that no new taxes and cutting spending made things go the wrong way,

When did Hoover cut spending?

Try google. I do not educate those incapable of trying to help themselves.

 

[EdwardBaiamonte]

So ed asks a really naive question:


Neither, me boy. It means nothing. Without knowing the condition of the economy. R Reagan found that tax and spend really, really helped the economy AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%. Hoover found that no new taxes and cutting spending made things go the wrong way, driving the ue rate from under 4% to 23% in four years. Roosevelt drove the ue rate down by increasing taxes and spending stimulatively.
But, me poor ignorant con tool, the answer is not as simple as your simple mind would like it to be. Kinda like your shorts. Depends.

AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%

I remember Reagan cutting taxes, when did he cut spending?

Hoover found that no new taxes and cutting spending made things go the wrong way,

When did Hoover cut spending?

Try google. I do not educate those incapable of trying to help themselves.

When it comes to taxes, Hoover is best remembered for the Revenue Act of 1932, the largest -- and most poorly timed -- peacetime tax increase in American history

 

[usmcstinger]

Anybody here an economist? I've read a lot of opinions here and just wondering, that's all. I hear a lot of bad opinions about Keynesianism, which I think has served us pretty well for decades. Peter Ferrara could give a pretty good anti argument, but what nations can he give a working example of that were successful under his brand of economics.

People speak of Keynesian or Austrian economic theories as though they were FORMULAS for how economies ought to be run in every circumstance.

Keynesianism is a proposed RESPONSE to a specific economic circumstance (deflationary depression), and NOT a formula for how an economy ought to run all the time.

Keynesians tend to believe that the economy should be centrally planned, regulated heavily or regulated to the degree that Depressions should not happen.

Sounds like they have an idea of how the economy 'ought to run' to me...

It has never worked. So why would support this flawed economic policy?
Are you delusional?

 

[EdwardBaiamonte]

People speak of Keynesian or Austrian economic theories as though they were FORMULAS for how economies ought to be run in every circumstance.

Keynesianism is a proposed RESPONSE to a specific economic circumstance (deflationary depression), and NOT a formula for how an economy ought to run all the time.

Keynesians tend to believe that the economy should be centrally planned, regulated heavily or regulated to the degree that Depressions should not happen.

Sounds like they have an idea of how the economy 'ought to run' to me...

It has never worked. So why would support this flawed economic policy?
Are you delusional?

yes Keynes is essentially anti American and anti freedom. Once you open the door to lib govt control it just keeps opening and opening. This is exactly what our Constitution was designed to prevent. The Great liberal Depression and current never ending liberal recession are prime examples.

 

[Toddsterpatriot]

So ed asks a really naive question:


Neither, me boy. It means nothing. Without knowing the condition of the economy. R Reagan found that tax and spend really, really helped the economy AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%. Hoover found that no new taxes and cutting spending made things go the wrong way, driving the ue rate from under 4% to 23% in four years. Roosevelt drove the ue rate down by increasing taxes and spending stimulatively.
But, me poor ignorant con tool, the answer is not as simple as your simple mind would like it to be. Kinda like your shorts. Depends.

AFTER he had tried cutting taxes and cutting spending, driving the unemployment rate to 10.8%

I remember Reagan cutting taxes, when did he cut spending?

Hoover found that no new taxes and cutting spending made things go the wrong way,

When did Hoover cut spending?

Try google. I do not educate those incapable of trying to help themselves.

I'm trying to figure out if you lied or just didn't know.....

 

[regent]

Keynesians tend to believe that the economy should be centrally planned, regulated heavily or regulated to the degree that Depressions should not happen.

Sounds like they have an idea of how the economy 'ought to run' to me...

It has never worked. So why would support this flawed economic policy?
Are you delusional?

yes Keynes is essentially anti American and anti freedom. Once you open the door to lib govt control it just keeps opening and opening. This is exactly what our Constitution was designed to prevent. The Great liberal Depression and current never ending liberal recession are prime examples.

To involve the government in the economy is exactly the reason the framers met to alter the Articles. Once in the hall the framers began discussing a whole new government rather than altering the articles. The new government would have comparatively tremendous economic powers now belonging to the states.
One more time: one of primary goals of the Constitution was to involve the central government in the economy, and the new government did exactly that, got involved in the economy.
As for lib control most of the framers were of different political persuasions but they based the new government on the liberalism of that time. Since 1789 America has become more liberal.

 

[EdwardBaiamonte]

To involve the government in the economy is exactly the reason the framers met to alter the Articles.

of course as a liberal you cant understand history. Most wanted to stay with Articles and on second try they got enough together for Convention to alter Articles by most didn't want to do that.

Also, the involvement in the economy was to encourage capitalism not lib Keynesianism. Welcome to your very first lesson in American History.

 

[Dad2three]

To involve the government in the economy is exactly the reason the framers met to alter the Articles.

of course as a liberal you cant understand history. Most wanted to stay with Articles and on second try they got enough together for Convention to alter Articles by most didn't want to do that.

Also, the involvement in the economy was to encourage capitalism not lib Keynesianism. Welcome to your very first lesson in American History.

Gawd you are a moron.....

 

[EdwardBaiamonte]

To involve the government in the economy is exactly the reason the framers met to alter the Articles.

of course as a liberal you cant understand history. Most wanted to stay with Articles and on second try they got enough together for Convention to alter Articles by most didn't want to do that.

Also, the involvement in the economy was to encourage capitalism not lib Keynesianism. Welcome to your very first lesson in American History.

Gawd you are a moron.....

personal attack because you lack the IQ to participate on a substantive basis

 

[regent]

To involve the government in the economy is exactly the reason the framers met to alter the Articles.

of course as a liberal you cant understand history. Most wanted to stay with Articles and on second try they got enough together for Convention to alter Articles by most didn't want to do that.

Also, the involvement in the economy was to encourage capitalism not lib Keynesianism. Welcome to your very first lesson in American History.

So why did most of the framers drop the Articles and write a new plan of of government if most framers wanted to stay with the Articles why did they meet the second time? Are you suggesting the Frames were forced to write the Constitution against their will. Attending the convention was voluntary and signing the Constitution was voluntary, and where in the Constitution is capitalism found?

 

[EdwardBaiamonte]

why did they meet the second time?

because first time not enough showed up to change Articles! In the end there was barely enough support to move from Articles.

 

[EdwardBaiamonte]

and where in the Constitution is capitalism found?

capitalism was the system in place at the time. THe Commerce Clause was designed to improve capitalist competition and prevent states from interfering.

 

[Foxfyre]

IMO the problem we run into trying to discuss economics on the Internet is that it so often boils down to absurd statements:

1. Reagan (or whomever is in office at the time) did this that produced bad results, therefore nothing he did that works counts and should be dismissed. . . or. . .Obama (or whomever is in office at the time) did this that produced good results and therefore everything he does is wonderful. . .or . . .this or that country did this or that with good or bad effect and we should do or avoid what they did.

2. Capitalism bad - Keynesianism good - or vice versa or whatever when it is obvious the poster was assigned what to say about both and doesn't have a clue what either actually is.

3. Thinking government is the best agent to fix the economy.

4. Thinking government can fix the economy.

5. Overstating and understating the effects of taxes on the economy with no real understanding of what the effects actually are..

6. Thinking more taxes, regulation, government authority, etc. would automatically fix everything. Thinking less taxes, regulation, government authority would automatically fix everything. . . in both cases without understanding the effect that all these have on the economy.

7. Thinking we can tax and/or spend ourselves into prosperity.

8. Thinking that prosperity can be achieved by making the rich less rich or the strong less strong.

9. Thinking that poverty can be relieved by giving more benefits to the poor.

10. Thinking that government can manage the economy more effectively than the private sector can.

 

[EdwardBaiamonte]

. Thinking that government can manage the economy more effectively than the private sector can.

the liberals thinks this because he lacks the IQ to understand capitalism. Lacking the IQ to understand, the liberal turns to faith in govt like a child turns to faith in Santa Claus or religon.