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oldandslow
06-15-2011, 10:07 AM
Serious couple of questions and an opportunity for our resident conservative economists to prove that austerity policies actually increase growth and benefit society...

1.) So how does decreased government spending actually help the economy grow - i.e. by taking money out of circulation how does economic activity increase?

2.) How does eliminating social safety nets actually provide more jobs, higher pay, and increase consumer spending?

3.) Have the recent tax cuts (Bush and by continuation, Obama) actually produced more jobs? If not, why not?

I am not being snarky here. I really would like to know how austerity policy benefits anyone.

FD
06-15-2011, 10:08 AM
I have an additional question, can proponents of austerity point to an example of another country that has tried this policy and found it to be successful (without major currency devaluation)?

Simplex3
06-15-2011, 10:16 AM
Austerity doesn't increase growth, it decreases debt. Your questions are, on their face, non-starters. It's irrelevant what those programs will or won't do because you can't afford to do them.

I'm sure my family would be better served if we owned a private jet, a yacht, and a $50M home on a private island. But guess what I can't afford to buy.

oldandslow
06-15-2011, 10:24 AM
Austerity doesn't increase growth, it decreases debt. Your questions are, on their face, non-starters. It's irrelevant what those programs will or won't do because you can't afford to do them.

I'm sure my family would be better served if we owned a private jet, a yacht, and a $50M home on a private island. But guess what I can't afford to buy.

But, in my view, austerity also decreases growth, which, in essence, will also increase debt. It becomes a viscious circle.

Spending has the chance to increase growth, which, in turn could decrease debt - see Bill Clinton years.

Edit -- It does matter what you spend it for, however, and it is why I view Obama with such disdain.

Brock
06-15-2011, 10:35 AM
But, in my view, austerity also decreases growth, which, in essence, will also increase debt. It becomes a viscious circle.

Spending has the chance to increase growth, which, in turn could decrease debt - see Bill Clinton years.

Edit -- It does matter what you spend it for, however, and it is why I view Obama with such disdain.

So government was what caused growth during the Bill Clinton years? LOL, I'm going to need an explanation for that.

Taco John
06-15-2011, 11:12 AM
Serious couple of questions and an opportunity for our resident conservative economists to prove that austerity policies actually increase growth and benefit society...

1.) So how does decreased government spending actually help the economy grow - i.e. by taking money out of circulation how does economic activity increase?

2.) How does eliminating social safety nets actually provide more jobs, higher pay, and increase consumer spending?

3.) Have the recent tax cuts (Bush and by continuation, Obama) actually produced more jobs? If not, why not?

I am not being snarky here. I really would like to know how austerity policy benefits anyone.

No offense, but these are loaded questions that aren't actually relevant. The fact is, we've stretched ourselves thin by overspending. Our debt stretches into generations into the future. The idea that spending even further into the future will create a magical economic rebound is no more valid than the idea if I put all my money on black, I have a good shot at doubling all of my money.

Your first question, by the way, isn't even a legitimate question. It completely ignores the source of money. Where does government get its money? Government takes money out of circulation through taxes, and creates more debt for the people through borrowing. This idea that government is putting money into the economy only shows how backwards your thinking is on this subject and why your questions are so tainted.

As far as your second question on eliminating social safety nets, I'm not sure why you think this question is a legitimate one. The goal is to reduce waste and debt, break dependencies, and to get society at large to be more self sufficient because the systems we have in place now are unsustainable and designed during an era long past. When Social Security was originally concepted, 20 workers supported the costs of 1 senior. Today, that number is 3 workers to 1, and that number is getting worse every year with more and more baby boomers coming online in the system. People 40 and under have little to no hope of receiving anything from social security despite the fact that they're paying in. So your question is ridiculously phrased and makes no real point. No one that I know has ever said reducing waste in social spending is going to result in "more jobs, higher pay, and increase consumer spending."

As far as the question about the tax cuts producing more jobs, who knows. What I do know is that the tax system we have now has produced more war. I'd like to see the elimination of the income tax, including the corporate income tax - which would result in millions of jobs being created virtually overnight because of how competitive we would be in the global marketplace. Of course, that's a pipedream. I'm certain that in the name of compassion and mercy we'll continue on with our empire of welfare/warfare state and make certain to keep the boot on the heads of everyone trying to make money - rich or poor.

go bowe
06-15-2011, 12:14 PM
Austerity doesn't increase growth, it decreases debt. Your questions are, on their face, non-starters. It's irrelevant what those programs will or won't do because you can't afford to do them.

I'm sure my family would be better served if we owned a private jet, a yacht, and a $50M home on a private island. But guess what I can't afford to buy.well then, cut your spending and cut your taxes...

prosperity is just around the corner...

Simplex3
06-15-2011, 12:21 PM
well then, cut your spending and cut your taxes...

prosperity is just around the corner...

Government doesn't create prosperity. It can only stand in the way of it.

go bowe
06-15-2011, 12:37 PM
Government doesn't create prosperity. It can only stand in the way of it.

i was talking about you being able to buy a yacht...

if government can create wealth (jobs in the private sector) by cutting spending but cutting taxes at the same time, why cant us average joes cut our spending and cut our income and be better off (prosperity is just around the corner)?

ok, the comparison sucks, but ask snr, i'm not sober...

that's my excuse and i'm stickin to it...

go bowe
06-15-2011, 12:38 PM
i really want you to buy a yacht, then we can have the next bash at your place (the yacht)...

Silock
06-15-2011, 02:55 PM
This is super-long, but worth it.

http://www.heritage.org/research/reports/2008/11/why-government-spending-does-not-stimulate-economic-growth

SNR
06-15-2011, 03:39 PM
i was talking about you being able to buy a yacht...

if government can create wealth (jobs in the private sector) by cutting spending but cutting taxes at the same time, why cant us average joes cut our spending and cut our income and be better off (prosperity is just around the corner)?

ok, the comparison sucks, but ask snr, i'm not sober...

that's my excuse and i'm stickin to it...Yep. Time to put down the firewater, dumbass.

cdcox
06-15-2011, 03:48 PM
This is super-long, but worth it.

http://www.heritage.org/research/reports/2008/11/why-government-spending-does-not-stimulate-economic-growth

That article makes many good points, but it misses a few too. I specifically want to discuss the section on highway spending.

The article argues that spending $1B on highways does not create any new jobs, because it sucks that $1B from the economy through taxes and causes a loss of jobs somewhere else. However, I would argue that since no ones taxes were immediately raised, that money was borrowed and no one in the private sector lost their job in 2010 due to stimulus spending. So in effect, spending $1B on highways NOW creates new jobs NOW that otherwise would not have been created, at the expense of future jobs that may have been created later. Secondly, even after you are stuck with the debt created by borrowing the money to accelerate the jobs, you still have something to show for it: improved infrastructural that will contribute to economic strength for the next 50 years.

I just wish more of the stimulus money had gone to such worthwhile projects.

petegz28
06-15-2011, 07:49 PM
All you have to do is take a look at Europe to see what over-dependence on the government gets you.

the problem we current have with government spending is several fold;

1. We are already broke so we are printing money to spend money which is making our money worthless and driving up the costs of things people need like food and gas

2. The money the Fed Gov is spending is being spent un-wisely and for the most part wasted. Even Obama admitted the other day that the "shovel ready projects" he touted so much weren't so shovel ready

3. What our Fed Gov has done has inhibited the free market which will be the ultimate savior of our economy, not some government money machine generated $'s spent on bullshit

Now if you don't like austerity then some things needs to happen so we don't need to do it in the first place;

1. Get the illegals out and off the taxpayer tit

2. Lower if not eliminate corporate taxes

3. Embrace the private market more and the government less meaning turning things like the post office over to the private sector

4. Roll with the punches. Meaning bad things will happen and you have to let most of them happen, as in get off the whole "too big to fail" motto and allow companies that are ran badly to weed themselves out instead of propping them up

5. I would gather there could be a host of regulations that could be eliminated that impede companies from doing business. In fact, government regulations is what made Obama's effort to fund shovel ready projects a failure


The problem with government spending and social saftey nets is eventually you run out of other people's money. Just ask Europe.

there is always this fear that if the government doesn't do anything the world will come to an end. Take GM for example, we heard millions of people would be out of work. Well, they would have been, temporarily. Do you think if GM failed there would be X amount less cars built? Or do you think someone somewhere would have taken advantage of the opportunity to increase, expand or start new businesses to fill the gap? Same thing goes for AIG. Do you think the world would have stopped if AIG fell and Goldman Sachs didn't get 100 cents on the $ in repayments?


You have a choice, you can embrace a new way of thinking more fitting with the times or you can keep doing the same BS that got us here in the first place and then bitch when we are forced with austerity measures.


If nothing else you take away from this post you can take this, the Fed Gov has rarely been successful when it has intervened in the private sector. When they do it usually raisies costs, eliminates jobs and buries us further into debt. So WTF do people still want the Fed Gov to fix things?

Chocolate Hog
06-15-2011, 07:53 PM
The Bush tax cuts haven't worked because they don't cut enough and tax cuts don't work when you increase spending.

Chocolate Hog
06-15-2011, 07:55 PM
So government was what caused growth during the Bill Clinton years? LOL, I'm going to need an explanation for that.

Played a part sort of. The internet was a big part in the economic growth and the military helped invent the internet so he's kind of right. I don't mind government being involved in innovation of energies and such if they keep to themselves. We're going to need to come up with new ideas moving forward if we want to grow the economy. New energy will play a big part in this.

petegz28
06-15-2011, 07:57 PM
That article makes many good points, but it misses a few too. I specifically want to discuss the section on highway spending.

The article argues that spending $1B on highways does not create any new jobs, because it sucks that $1B from the economy through taxes and causes a loss of jobs somewhere else. However, I would argue that since no ones taxes were immediately raised, that money was borrowed and no one in the private sector lost their job in 2010 due to stimulus spending. So in effect, spending $1B on highways NOW creates new jobs NOW that otherwise would not have been created, at the expense of future jobs that may have been created later. Secondly, even after you are stuck with the debt created by borrowing the money to accelerate the jobs, you still have something to show for it: improved infrastructural that will contribute to economic strength for the next 50 years.

I just wish more of the stimulus money had gone to such worthwhile projects.


Thus the reason not to expect the Fed Gov to be the hero in the first place. Instead of spending money on things like you mentioned, highway repair, we made sure Goldman Sachs got all their money.

Instead of culling government regulations and eliminating those that inhibit economic growth we made more regulations and created more uncertainty about the economic future. Instead of getting freeloaders out of our country and saving the taxpayer money we passed laws to spend more on them. Instead of lowering coporate taxes and creating new incentives for business we shoved health care mandates down the throats of American business and increased the cost for them to do business.

There are a host of things that were done badly, not just the unwise spending of money.

petegz28
06-15-2011, 08:00 PM
Played a part sort of. The internet was a big part in the economic growth and the military helped invent the internet so he's kind of right. I don't mind government being involved in innovation of energies and such if they keep to themselves. We're going to need to come up with new ideas moving forward if we want to grow the economy. New energy will play a big part in this.

The internet was a player but the biggest growth engine in the Clinton era was the embrace of desktop computing. Millions upon millions of new jobs were created as companies went away from old mainframe technology and went to client server technology. That and you had millions of temporary jobs created because of Y2K. You can thank Bill Gates more than Al Gore for the growth in the 90's.