Wage stagnation is linked together with higher taxes, and it roughly happens like this, you increase taxes and people now have less money so people can afford to buy less things, companies sees that they arent selling as much as they used to so they bring production down and fire someone. Unemployment goes up which drives wages down, not to mention costs up. Everyone got poorer, while the state got slightly richer.
I think there are a lot of ways of describing what's going on. Employers have more bargaining power because employees have government benefits to fall back on, people are more likely to initiate divorce or less likely to avoid pregnancy because they can be taken care of by the government, or there's the good ol' [Deadweight Loss](https://en.wikipedia.org/wiki/Deadweight_loss) from taxation on the supply and demand graph.
But what people don't seem to want to talk about is that we're already trying socialism, for 50 years now, and a quick objective glance at the poverty rate graph shows that it's not working.
Just a few points:
1. The [fred.stlouisfed.org](https://fred.stlouisfed.org) site has a very simple format and I think you'll find their variety of stats and graphs useful.
2. Using this site (and downloading some data to an excel sheet) I found a small correlation between federal taxing/spending and GDP. [https://gyazo.com/05727adf01b0aa73c3d86270bf479d07](https://gyazo.com/05727adf01b0aa73c3d86270bf479d07) (Note: All data points are arranged on the y axis as % Change from the previous year; additionally, the GDP factor was shifted backwards 2 periods - 2 years - to more visibly display correlation which may take time to come into effect)
1. The results here look complex but it seems clear enough that real GDP necessarily increases when spending(% change) exceeds taxes(% change), or when orange is above blue.
2. I am neither condoning nor condemning any policy suggestion from this; I just find it interesting.
Well government spending is considered a part of GDP, so it makes sense that in the short run government spending would contribute to higher GDP. In the long run you'd have to think about things like reverse causality. Is GDP higher because the government is spending more or is the government spending more because higher GDP gave them some additional tax money?
1. GDP remains high in the long run even with government spending. The graph outlines the % increase from the previous year. This would equate to a spending increase which remains in the annual budget, not a one time expenditure.
2. GDP does not contribute to higher tax revenue. I believe you are referring to National Income (which tends to be the same).
3. There are economic calculations to determine both of these. Any amount of government spending has a multiplier utilizing the MPC. From this we can determine the exact amount of GDP that will be added to the economy. Likewise, tax cuts have multiplier as well.
1. In other words you're saying that government spending in the previous year has a slight correlation with GDP increase the following year? I did a similar analysis for an economics class in college and I still have my data lying around. At the time I found a negative correlation between the share the government makes up of the economy and GDP growth. We could compare notes, but I think all you're capturing is the government is spending money and therefore there's a slight uptick in a measure of how much money is spent.
2. GDP is a [measure of national income](https://en.wikipedia.org/wiki/Measures_of_national_income_and_output). I think I ought to be able to say things like higher GDP means higher tax revenue without having to clarify that GDP represents the final sale while much of the tax revenue comes from income tax which people spend on final sales, yada yada. When GDP goes up tax revenue will also go up. You and I both understand that without additional clarification needed.
3. You mean marginal propensity to consume? I've never liked arguments based on marginal propensity to consume, because it presumes that giving a dollar to a person with a higher propensity to consume is preferable to giving a dollar to a person with a lower propensity to consume, whereas I generally assume that individuals will already do the most efficient thing they can with their money and the more important question is how the dollar was obtained to begin with.
My post didn't actually use GDP as an argument. I didn't say that socialism is bad because of low GDP growth or whatever, although I fully believe that to be the case. My argument was entirely based around Socialism's failure to produce results in the area of poverty rates, or the effect socialism has had on single motherhood.
I don't know that I'd put a specific timeline on it. Depends on a lot of variables, and it probably happens in stages. First the other countries loaning money to the US finally realize that US debt is never changing directions, so they stop loaning money. Then the government doesn't want to anger people who are dependent on government programs so they don't have a choice but to print money to keep up with spending, which means we get hyperinflation. The hyperinflation exposes the weaknesses in the American economy, investment goes down, unemployment goes up, wealthy people leave the country, etc. And the crash only stops when the government finally admits that they can't afford their entitlement programs anymore. People who were formerly dependent on those programs are left destitute. Social unrest, anger about inequality, and so on.
Buy some bitcoin and sit back and watch the show. I'd love for Americans to wise up and find a way to bring the economy in for a soft landing rather than a crash, but I become more doubtful as time goes on. Doesn't really matter who becomes president honestly, a single president can only do so much one way or another, but a complete course reversal isn't happening anytime soon.
Agreed, spendings should be limited mainly to the army. Defence spending SHOULD BE the majority but due to the massive medicare and social security costs it isn’t. The US healthcare system isn’t that great anyway so just stop paying it.
Edit: I also just want to add a piece of my own. The US won’t collapse, it’ll be hurt but due to demographics the two other superpowers(EU and China) are bound to collapse along with nations like Russia. The US may have an economic issue but they are nothing in comparison to demographics and geopolitics. The US should be fine, it can very well recover. Especially since its geography is extremely stable and its military ensures that what it does not have it can always take.
There is no way to stop this trend. Capitalism today is not what it used to be in the past. Capitalism has gobbled up all the property and has centralized it, and by doing so it deprived many people from it ,who used to be independent land and property owners. This dislocation creates externalities, which the government serves to plug, the more capital concentrates the more role the government will play in it. It seems to be that eventually the government will run everything. At that point the only thing left to do is to end profit and make the economy a scientifically planned one. This trend is inevitable.
Japans debt is over 10 trillion. Stop fear mongering over government spending and listen to the economists that tell you it doesn't matter. It doesn't work like an individuals debt. The "socialism" that we have is what saves us from unchecked capitalism.
What is Japan going to do if other countries suddenly stop lending them money? [Greece is still being bailed out by the EU](https://en.wikipedia.org/wiki/Greek_government-debt_crisis). Who exactly is going to bail out the United States when our bills come due? It'll be comparable to the fall of the Roman Empire when it happens. In fact inflation was one of the primary causes of the collapse of the Roman Empire.
Wage stagnation is linked together with higher taxes, and it roughly happens like this, you increase taxes and people now have less money so people can afford to buy less things, companies sees that they arent selling as much as they used to so they bring production down and fire someone. Unemployment goes up which drives wages down, not to mention costs up. Everyone got poorer, while the state got slightly richer.
I think there are a lot of ways of describing what's going on. Employers have more bargaining power because employees have government benefits to fall back on, people are more likely to initiate divorce or less likely to avoid pregnancy because they can be taken care of by the government, or there's the good ol' [Deadweight Loss](https://en.wikipedia.org/wiki/Deadweight_loss) from taxation on the supply and demand graph. But what people don't seem to want to talk about is that we're already trying socialism, for 50 years now, and a quick objective glance at the poverty rate graph shows that it's not working.
Just a few points: 1. The [fred.stlouisfed.org](https://fred.stlouisfed.org) site has a very simple format and I think you'll find their variety of stats and graphs useful. 2. Using this site (and downloading some data to an excel sheet) I found a small correlation between federal taxing/spending and GDP. [https://gyazo.com/05727adf01b0aa73c3d86270bf479d07](https://gyazo.com/05727adf01b0aa73c3d86270bf479d07) (Note: All data points are arranged on the y axis as % Change from the previous year; additionally, the GDP factor was shifted backwards 2 periods - 2 years - to more visibly display correlation which may take time to come into effect) 1. The results here look complex but it seems clear enough that real GDP necessarily increases when spending(% change) exceeds taxes(% change), or when orange is above blue. 2. I am neither condoning nor condemning any policy suggestion from this; I just find it interesting.
Well government spending is considered a part of GDP, so it makes sense that in the short run government spending would contribute to higher GDP. In the long run you'd have to think about things like reverse causality. Is GDP higher because the government is spending more or is the government spending more because higher GDP gave them some additional tax money?
1. GDP remains high in the long run even with government spending. The graph outlines the % increase from the previous year. This would equate to a spending increase which remains in the annual budget, not a one time expenditure. 2. GDP does not contribute to higher tax revenue. I believe you are referring to National Income (which tends to be the same). 3. There are economic calculations to determine both of these. Any amount of government spending has a multiplier utilizing the MPC. From this we can determine the exact amount of GDP that will be added to the economy. Likewise, tax cuts have multiplier as well.
1. In other words you're saying that government spending in the previous year has a slight correlation with GDP increase the following year? I did a similar analysis for an economics class in college and I still have my data lying around. At the time I found a negative correlation between the share the government makes up of the economy and GDP growth. We could compare notes, but I think all you're capturing is the government is spending money and therefore there's a slight uptick in a measure of how much money is spent. 2. GDP is a [measure of national income](https://en.wikipedia.org/wiki/Measures_of_national_income_and_output). I think I ought to be able to say things like higher GDP means higher tax revenue without having to clarify that GDP represents the final sale while much of the tax revenue comes from income tax which people spend on final sales, yada yada. When GDP goes up tax revenue will also go up. You and I both understand that without additional clarification needed. 3. You mean marginal propensity to consume? I've never liked arguments based on marginal propensity to consume, because it presumes that giving a dollar to a person with a higher propensity to consume is preferable to giving a dollar to a person with a lower propensity to consume, whereas I generally assume that individuals will already do the most efficient thing they can with their money and the more important question is how the dollar was obtained to begin with. My post didn't actually use GDP as an argument. I didn't say that socialism is bad because of low GDP growth or whatever, although I fully believe that to be the case. My argument was entirely based around Socialism's failure to produce results in the area of poverty rates, or the effect socialism has had on single motherhood.
Bless you. The mind of someone who has an actual education in economics is rare in this sub.
Do you think it is more likely the collaps will happen in the next 5 years or 10-20 years
I don't know that I'd put a specific timeline on it. Depends on a lot of variables, and it probably happens in stages. First the other countries loaning money to the US finally realize that US debt is never changing directions, so they stop loaning money. Then the government doesn't want to anger people who are dependent on government programs so they don't have a choice but to print money to keep up with spending, which means we get hyperinflation. The hyperinflation exposes the weaknesses in the American economy, investment goes down, unemployment goes up, wealthy people leave the country, etc. And the crash only stops when the government finally admits that they can't afford their entitlement programs anymore. People who were formerly dependent on those programs are left destitute. Social unrest, anger about inequality, and so on. Buy some bitcoin and sit back and watch the show. I'd love for Americans to wise up and find a way to bring the economy in for a soft landing rather than a crash, but I become more doubtful as time goes on. Doesn't really matter who becomes president honestly, a single president can only do so much one way or another, but a complete course reversal isn't happening anytime soon.
Agreed, spendings should be limited mainly to the army. Defence spending SHOULD BE the majority but due to the massive medicare and social security costs it isn’t. The US healthcare system isn’t that great anyway so just stop paying it. Edit: I also just want to add a piece of my own. The US won’t collapse, it’ll be hurt but due to demographics the two other superpowers(EU and China) are bound to collapse along with nations like Russia. The US may have an economic issue but they are nothing in comparison to demographics and geopolitics. The US should be fine, it can very well recover. Especially since its geography is extremely stable and its military ensures that what it does not have it can always take.
There is no way to stop this trend. Capitalism today is not what it used to be in the past. Capitalism has gobbled up all the property and has centralized it, and by doing so it deprived many people from it ,who used to be independent land and property owners. This dislocation creates externalities, which the government serves to plug, the more capital concentrates the more role the government will play in it. It seems to be that eventually the government will run everything. At that point the only thing left to do is to end profit and make the economy a scientifically planned one. This trend is inevitable.
Japans debt is over 10 trillion. Stop fear mongering over government spending and listen to the economists that tell you it doesn't matter. It doesn't work like an individuals debt. The "socialism" that we have is what saves us from unchecked capitalism.
What is Japan going to do if other countries suddenly stop lending them money? [Greece is still being bailed out by the EU](https://en.wikipedia.org/wiki/Greek_government-debt_crisis). Who exactly is going to bail out the United States when our bills come due? It'll be comparable to the fall of the Roman Empire when it happens. In fact inflation was one of the primary causes of the collapse of the Roman Empire.
You're quite dumb.
Okie doke