[quote name='tivo']I see what you're trying to say but ts wrong. Joe Federal was paid by taxes (and then returned a small portion of those taxes at the end of the year) and because its all the same tax money,
one can essentially say he doesn't pay taxes.[/quote]
From a purely accounting point of view, a federal employee is a net negative on the balance sheet, sure. But they also pay sales tax. And they buy goods. When we pay Joe Federal his paycheck you get his landlord/mortgage servicer, child care provider, grocer, mechanic, house cleaner, etc. etc. all getting income. And then they pay tax to the feds on the income. And they all pay state taxes, local taxes, etc. It's the pebble in the pond.
Joe Federal never created any wealth and never brought in any money to the government. He was suckling at the teat for the past 10 years or so. However, any employment in the private sector would give him a salary which constitutes either newly created wealth or newly accessible wealth which would then be taxable. He would be bringing $ into the government as Joe Private-Company while Joe Federal only takes money out.
I mean.. ok. But we can't live without them. And what public employees provide, while not in the wealth generating department, is typically the availability of a service or the guarantor of a service provided. Every minute of every day, you are relying on the guarantee of a service provided by government. Flushing your toilet (wastewater). Making a phone call (FCC). Turning on a light (utility commission). Driving to work (DOT, law enforcement). Filling your gas tank (weights and measurements). Eating food (FDA). Contract resolution of disputes (courts). On and on. Business itself relies on these to create wealth. That reliance has significant material value and de facto creates the atmosphere needed for the generation of wealth.
Now, we can certainly point to stuff we don't like and think is redundant, but dismissing the macro affect of this reliance isn't rational.
Secondly, by understanding the paragraph and last sentence above, one can see how bringing any person into the taxable private sector would not lower the tax base but increase the number of individuals to which taxes are drawn from. [Again, its important to see how Joe Federal is paid by taxes and then returns some of those taxes, essentially only receiving tax money in the form of his yearly salary]
Assuming there is a job available and assuming the job returns wealth in a capacity over and above said Joe Federal's ability to contribute to the reliance decisions made by business on government functions. And that's not always the case.
Lastly, I don't see how going from government to private company employee would lower the output. Joe Federal might be forced to take a pay decrease, but the output from the company's point of view would be the same. They hired Joe Federal to do the work and produce the same output that someone else would have done (e.g. Joe College Grad.). Output isn't lowered. And, remembering that the govt. doesn't create any wealth, the govt. "output" produced by Joe Federal either does not exist or would be shifted to the private sector once Joe Federal is canned.
If the services provided by the government were degraded as a result, you would see tangible results. Last week New Orleans was on a boil water order for 3 days. What is the economic impact of that? Greater or less than the cost of the employees needed to prevent that? What if it had been a week? A month? That's the issue in a nutshell.
explain why it wouldn't be used on employment growth. I can't think of a single way how a private company would use money that wouldn't spur some growth (immediate or future). I'd also like to hear explanation about your second qualm.
In a rational market, it would be used on employment growth. But markets are not rational. In fact, they're desperately irrational at the macro level. You can see it in things like the flash crash and the lack of inflation. And who says that growth that will be spurred will be in America? Who says it will be in any way contributory to America's bottom line?
True. But what about today. What projects can the government put up that will have similar results? Again, Keynes said there was no shortage of projects which could be done. Where's the list? You answer this.....
I can't honestly answer that because I don't spend that much time searching for Keynesian projects. But one off the top of my head would be
this. $600 billion for the ENTIRE THING. The same amount of money Bernanke is going to helicopter into the banks (again, *sigh*).
Let's be real here. In the real world, which would provide more stimulus? Giving banks another gigantic check that they'll use to protect themselves against upcoming lawsuits related to mortgage fraud, or building that monster project? Which will lower costs for people and business? Which will put people to work? Which will result in the most tax money returned to government over the life of the plan?
Honest to god. Look at that link and try to visualize that world. I can't even wrap my head around how insane that would be.
I like that last part. Government savings, just like personal savings, should be used when times are rough and then built up again whenever possible.
We definitely agree there.
[quote name='tivo']The "speed-topia" bit got to me on a separate issue which,
I apologize is tangent from the discussion but was too good not to write:
I think everyone should forgo any utopian ideals. Do not imagine things will be better or complain about the current situation. Instead, think that life will always be difficult (or worse) for the rest of your life and learn to deal with it. One will be happier if they are self-reliant and charting their own course instead of waiting for some govt. handout.[/quote]
Economics, despite their bullshit, is a soft science. There is never an "answer", just the most informed guesses possible. It lends itself well to utopian dreaming and then reinforces that thinking by never giving you the ability to truly have everything you want, making you want more. Like capitalism
I believe this is a big difference between the liberal and conservative ideology, between the "everybody wins" and the uphold values, not feelings mindframe; between the what can/should government do to make things better or more fair and the "I'm leading my life and don't need any government intervention". You, the liberal reading this, will probably disagree but I think its poignant commentary about the conflict of visions. About the ideal and real, and about the potential of man and ability of elites (e.g. govt) in "changing" the direction of millions of people over hundreds of years. Basically this boils down to either, "Yes we can" vs. "leave me alone."
I can agree with this. It's the classic conservative vs. classic liberal position. Conservatives look back to a world that never existed and say "we should get back there". Liberals look forward to a world that'll never exist and say "we can't get there fast enough". I think it just comes down to "I" vs. "we". The difference in my mind (the liberal mind I guess) is that when "we" do better, that includes me. When "I" do better, it doesn't necessarily. I think "we" works better.
Dumb, but an anecdote. A old time southerner coworker of mine loves to say: "You can say you ain't got roaches. If your neighbor got roaches, you got roaches."
Lastly, relating it to the thread: its the idea that things will be better in the future that lets Keynes suggest a quasi-boom can be held indefinitely, that we don;t need to save and that we should spend it when we get because there wont be any rainy days in the future. The anti-keynes monetarists imagine cloudy with a chance of rain, that the future is uncertain and could even worsen so we need to save and be prepared. conservatives and liberals easily divide into the two groups.
I think that the boom/bust can be tamed but never ended. But by the same token, what would the economic world look like without the SnL crisis? The dotcom bubble that murdered wealth? The Enron/Worldcom crashes that murdered wealth? The housing crisis that's murdering wealth? Is Keynesian theory the answer? I don't know, but we seemed on a genuine Keynesian chart for about 30 years and those were damn good years. The rise of Reagan and the supply side seems to strongly correlate with the boom/bust cycle. Is is causation or correlation? I don't know, but I suspect it is.
People are grumbling about problems in China but Ireland and Greece continue to dominate the topics of conversation. The China thing has a weird vibe to it, almost like when people were grumbling about Lehman (but no one wanted to say it out loud) before it crashed. Obviously China won't go that route, but it's lost 10% of its market value in the last 2 weeks (which would cause a firestorm in America) and its inflation seems out of control. Commodities are down across the board (a big China indicator). China doesn't release solid economic numbers (and some say they outright lie) because during the good times they wanted to hide just how bad they were screwing everyone via currency manipulation, but now it looks like they're hiding serious structural weakness. It will make for an interesting watch.
A good read if you're interested. To tame inflation, the answer is to hike the interest rate and let your currency appreciate. The two things that China would do over its own dead body.
ing joke. Sure, that salary sounds get in "flyover country", but part of the reason it is what it is is *because* of the cost of living. The agency is based in the DC area and they understand that they must pay accordingly.[/quote]
