• Tim Knight from...
    04/28/2016 - 00:27
    I was expecting a few boring candidate statements of the U.S. Senate - AKA the World's Most Exclusive Club - but, boy, was I wrong. Just take a look at some of these gems.
  • Tim Knight from...
    04/28/2016 - 00:27
    I was expecting a few boring candidate statements of the U.S. Senate - AKA the World's Most Exclusive Club - but, boy, was I wrong. Just take a look at some of these gems.

Guest Post: How Government Spending Impoverished Us All

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Fri, 10/14/2011 - 23:01 | 1776159 bigwavedave
Fri, 10/14/2011 - 23:26 | 1776197 X.inf.capt
X.inf.capt's picture

excellent point, dave!

most everything is synthetic,

thank god they havent started making plastic food for the u.s.,or

soylent green....bitchez!

Fri, 10/14/2011 - 23:29 | 1776230 dlmaniac
dlmaniac's picture

"Government's burden on the private economy is best measured not by how much revenue it collects, but how much it spends.' / Milton Friedman.

Sat, 10/15/2011 - 00:16 | 1776311 AldousHuxley
AldousHuxley's picture

http://www.businessinsider.com/griffin-perry-2011-10

 

Rick Perry's Son Was Forced To Quit His Job At Deutsche Bank Son of government worker When is Clinton's son-in-law going to quit goldman Sachs? GS is down half and no layoffs for banksters? Hatzius askign for QE3 so he can keep his job. http://www.forbes.com/sites/afontevecchia/2011/10/14/goldmans-hatzius-u-...
Sat, 10/15/2011 - 00:22 | 1776319 AldousHuxley
AldousHuxley's picture

and here is your mitt romney at bain cap telling southern rednecks how he has their best interests suckers!

 

http://static6.businessinsider.com/image/4e987cd86bb3f74575000007/mitt-r...

Sat, 10/15/2011 - 06:08 | 1776589 grekko
grekko's picture

The formula for GDP appears to be missing something, let's call it "Z", which equals government (local, state & federal) borrowing.  This must be subtracted from the "G" term to come up with a real GDP.  Also, there should also be a term (for borrowing) to subtract from private consumption as well.  With these two added in, we'd probably see real GDP was just crawling along since 1971.

Sat, 10/15/2011 - 07:15 | 1776627 Raging Debate
Raging Debate's picture

Just create a new variable set that measures leverage. Call it the Leverage Meter. The PM's consumption vs. debt issuance would probably be one of the variable sets. When the Leverage Meter that the people use to see how they are being stolen from then the people know what to do sooner rather than waiting forty years to realize literally half their wealth was stolen from them.

Sat, 10/15/2011 - 09:46 | 1776745 French Frog
French Frog's picture

"US Federal spending compared to GDP. The magnitude of spending really takes off after about 1970."

All roads lead to or come from the end of the Gold standard?

Sat, 10/15/2011 - 08:36 | 1776688 Thisson
Thisson's picture

The borrowing you are pointing out is already included in the formula.  G = government spending (this includes when government spends borrowed money).  C similarly includes borrowed money.

That being said, your overall point remains valid that when you exclude borrowed money, there has been little organic growth of aggregate demand (GDP) and hence productivity.

Sat, 10/15/2011 - 08:44 | 1776692 nmewn
nmewn's picture

If I recall Kuznets (the "inventor" of the GDP metric) told Congress at the time he revealed it, GDP should not be used as a measure of a societies prosperity because it is flawed when used that way.

Government removes capital from an economy, it does not add to it...printing presses notwithstanding ;-)

Sat, 10/15/2011 - 10:19 | 1776777 LetThemEatRand
LetThemEatRand's picture

"Government removes capital from an economy, it does not add to it..."

Your statement would be true if 100% of capital were invested in a government-free economy.  But the reality is that uber-wealthy robber barons hoard their money and store it.   They will not put that money into the economy unless forced to by taxes, labor laws, etc.   Government redistribution in this context will add capital to the the economy.   

Sat, 10/15/2011 - 10:39 | 1776803 nmewn
nmewn's picture

"They will not put that money into the economy unless forced to by taxes, labor laws, etc.   Government redistribution in this context will add capital to the the economy."

Well, apparently your idea of what taxation & labor laws are for is very different from mine.

Taxes are to fund government operations, nothing more.

The taxes are "confiscated" from the economy. Once out of the economy they cannot add to the base of the economy without being re-introduced by government into what they deem fitting. You presume that government knows better than market participants on how best to allocate capital throughout the economy. I'm comfortable with the track record they have, that they do not.

As to uber rich...I'm not one by the way...but all that "hoarding" will be spent at some point. People move in & out of the ranks of the rich everyday...its not a static thing.

Its the manipulators of government policy and government itself who sets those policies who deserve our wrath...IMO.

Sat, 10/15/2011 - 10:51 | 1776819 LetThemEatRand
LetThemEatRand's picture

Again, you would be correct if your narrow definitions were valid, but they are not.  "Government operations" include things like building bridges so that people can get to work in large cities more efficiently, building water/sewer infrastructure for cities, etc.  They also include direct hand-outs to the poor, who then spend every penny into the economy.   If the wealthy are otherwise going to take their excess cash and put it in a safe (they actually do that), the economy will benefit from the forceful taking of that cash and putting it to those uses.   Labor laws -- not addressed in your response -- even more directly inject value into the economy because they do things like force companies to pay higher wages and hire more workers.  The problem I see is that the robber barons have figured out how to bribe the politicians to avoid most of these rules and taxes, and they have been given free reign to go to countries like China that have no such laws.  Thus, government has been borrowing instead of redistributing.  Taxes are borne more and more by people who would actually spend their money and/or invest it for new production, and not just put it in Switzerland.  Taxation in this context does create the negative effect of which you complain.

Sat, 10/15/2011 - 11:11 | 1776868 nmewn
nmewn's picture

So you are a fan of big government...I am not.

Where do we see the economy suffering for the lack of a bridge? Have we not asphalted over the entire country? A quick look at any map reveals we have roads & highways everywhere. We pay taxes & fees to maintain these roads...I'm of the opinion we have enough of them.

I don't live in the city...but if those residents want a brand new water & sewer system why does it fall to me to help build it through federal debt loads? Can't they afford it themselves? I asked no one to pay for my well or my septic system.

And the poor being used as an economic redistribution tool in your example seems a little callous. One has to ask, what entity benefits in keeping the poor...poor. I would say the state does so it can keep taxes at an elevated level.

Labor laws are useful and have been shown to be so. But over regulation can and does subtract value. There are now more Department of Agriculture employees than actual farmers. I see no value in that.

Sat, 10/15/2011 - 11:19 | 1776882 maximin thrax
maximin thrax's picture

Direct hand-outs to the poor equate to converting one person't labor into another's consumption. Many call such institutionalized expolitationt Slavery. Why must there be ANY direct handouts when there are so many things, like roads and bridges you mentioned, that need construction or repair? The economy would surely benefit more if those who received government handouts worked (produced) for them. And labor laws, specifically wage laws, destroy domesic jobs, sending them overseas so stuff can be produced and sold for what the Market (that's us) is willing to pay. That hardly counts as beneficial to this economy, especially when those not employed rely on wealth transfer from those who are, as there's no net increase in production. We need two things to turn this country around - Production and Savings. From production comes Real Wealth and from savings come Real Capital. You seem opposed to both.

Sat, 10/15/2011 - 12:05 | 1777016 FeralSerf
FeralSerf's picture

Why do we need more production?  I can't see that there's any shortage of stuff?  If there's a problem, it's that there's too much production.

Most 21st century U.S. production increases are the paper shuffling variety.  There's definitely, IMO, an oversupply of this already.

Americans' wealth is being mostly absorbed by military expenditures and the FIRE industries.

Sat, 10/15/2011 - 16:34 | 1777533 maximin thrax
maximin thrax's picture

Clearly, we need to produce more of what we already consume, even if that stuff doesn't pay a living wage. Make up for that by providing workers who need it, not the idle, with a safety net.

Sun, 10/16/2011 - 12:45 | 1778882 Chuck Walla
Chuck Walla's picture

The county farm was a fine institution for helping the poor. They got room and board in exchange for growing their own food and maintaining the place. They got the dignity of working for what they received.  

 

Does anyone remember how the Democrats howled when it was suggested the poor in the projects help maintain it?  No, they said, it was unfair to take someone else's money and actually do something for it, thus ensuring the vote of the layabout class could remain firmly in the pocket of Democrats and, in turn, the Left need never worry about this important pool of votes wandering off the plantation and possibly thinking for themselves.  They gutted public education anyway, just in case the poor ever got an idea what chumps they really are.  Doomed to generational poverty by the soft bigotry of low expectations and the outright bigotry of no real interest past pulling a lever every couple of years.

Sat, 10/15/2011 - 10:58 | 1776841 LetThemEatRand
LetThemEatRand's picture

P.S.  If you look at virtually any statistics concerning wealth distribution in the U.S., it is becoming more and more difficult for the "lower" classes to join the ranks of the rich as the wealth distributes to an ever shrinking percentage of the population.  Another downside to lack of distribution.  And as the rich get richer, they have less and less need to ever spend/invest their excess funds.  

Sat, 10/15/2011 - 11:20 | 1776892 nmewn
nmewn's picture

I'm not saying we don't have a problem with the poor getting up the ladder. I'm saying government is a large part of the problem.

You can't have government minders over regulating, shutting down little girls lemonade stands, impromptu car washes in poor neighborhoods, sun tanning salons in strip malls...and what not...and then turn and say we need still more government.

We need in fact less.

Sat, 10/15/2011 - 12:09 | 1777025 El Yunque
El Yunque's picture

What is less government. If we have to go back and re-fight all of the battles we have already been through to re-establish things like collective bargainning or establishment of the EPA, any number of regs and agencies, do we in fact end up with a usable less, or just another round of putting it our face day to day in the firmly in the way of American life?

if you consider that small business (lemonade stands?) accounts for less than 8% of the jobs in this country at any given point, it seems we're chasing snipe out in the sticks, while the real carnage takes place, the diversions from the greater problems we're facing, for the nuturing of the American citizens need to be shielded from the boogey men.

Government is a collection of people we elect, and as such operates in much the same way a gun sitting on a table empty does, it ain't dangerous till somebody picks it up, loads it, and goes postal.

So government could be a problem, or a solution: When you consider as well, that conservative government has given us 135,000 new private contractors and companies providing goods and services to the U.S. government, a DHS super-duper agency composed of about 222,000 employees collected form the 21 agencies moshed togehter to create it, and a U.S. president lowering taxes, and borrowing money on the idea of the "stretegic defecit" as adopted under Reagan in the eighties, then spending that ten trillion dollars on two wars and the protection and security of a country and it's needs outside of it's sovereign borders, yep, it looks like something that needs to be ratcheted down.

When I think about lowered taxes and the myriad companies earning my tax dollars tax-free, at a markup to me, while I don't work for or particapate in their management or earnings, I'm thinking being a tax and spend liberal beats a no tax, borrow and spend on a small group of insiders a problem, a big problem.

And there is no big government or regualation involved in it what so ever, merely a smaller and smaller group of insiders getting fiflthy stinking rich, pulling so much wealth out of the top of the system and parking it, as a huge huge problem, whereas, when the folks in power decided to roll bag the regs - the firewall between retail and investment banking, lowering of capital requiremnets for banks, the decision not to have eyes into derivatives and the lack of limits in commodities index specualtion, all as components of an umanaged system whereas capital flows towards higher risk and return, then breaks over into a free fall as the trust gets broken because, collectively, no one knows what the hell is inside of the world of finance now that can blow the hole son of a bitch to smithereens.

Not because of too much government but too little of it, not because of too many people regulating and looking over shoulders, but because it would operate in it's self interest, completely ignoring the biggest problem of capitalism, period.

People, crazy, fickle people.

That ain't a large government problem, that's a large people problem, and should be considered anytime anyone considers trickle down, or Friedman, or the Austrians, or Ron Paul.

Imagine the NFL without it's "socilaistic" tenants of profit sharing, salary caps, collective bargainning and try to determine how many years it would be until a lack of rules and those things put in place to balance it out, turned it into a one pony show, and the whole interprise might go casters up, no eyes, no entertainment value, no add dollars, just Jones polishing his trophy in perpetuity in Dallas.

I think we need a change in our philosphy about government. Electing autocrats from business to lead or represent in a democratic republic is shoving square pegs into round holes. Government aint in the business to make money, but because of this "less" government philosophy, we now have a government that has found a way to drain the swamp of the many and enrich a few, to the great detriment of capitalism in general.

A guy collecting the trash on the national mall, now paid by a private concern to do the same job at a markup to you, the tax payer.

And you want less? I'm thinking I want more.

Huzaa

Sat, 10/15/2011 - 12:28 | 1777055 El Yunque
El Yunque's picture

Sorry about the grammar and spelling. I whipped it out, as I have to get to work now, I drive a shovel for a living, I'm not a trader, hold no wealth, and hell, I have no credit cards, thus I believe what I have to say about all of this has little relevance anyway.

The previous post was my first post on ZH; I've watched and laughed here for years, but haven't participated out of fear.

I'm throwing that shit out, so, everyone let me know what a fool I am, you'll get little argument from me on that one.

But as a bystander, I've been sucked into a lot of little battles I don't have time for anymore, and was just fine until the right started swinging a mace in the place years ago.

Up until 2001 I was making $200k a year fixing computer related shit. If this thing doesn't completely implode in the next six months, I intend to do that again. If if does, I will be growing beans and rasing cows, or something equally important like counting down the days until the sun explodes, and the earth is flat again.

Huzaa

Sat, 10/15/2011 - 15:02 | 1777308 nmewn
nmewn's picture

You did fine.

Sat, 10/15/2011 - 20:49 | 1778023 wisefool
wisefool's picture

Agree. you did fine. and dont worry about any junks (red arrows) unless somebody replies with the rationale.

Sat, 10/15/2011 - 12:14 | 1777032 wisefool
wisefool's picture

Dont forget the tax code, which allows the poor to stay poor with the incentive that they avoid a signifigant ammount of taxation, and the rich stay rich because they avoid a signifigant ammount of taxation ... but as you mentioned the middle class is too prideful to go the former and taxed to prevent them from entering the later. It is 99.9 vs .1, but if you dig deeper it is 51% vs 48.9% vs .1%

-Sun Tzu

Sat, 10/15/2011 - 12:53 | 1777092 tmosley
tmosley's picture

You do realize that "funds" or "money" or "savings" aren't wealth in and of themselves, but merely a claim on actual material wealth, right?

Spending doesn't help the economy, it hurts it, because every penny that is spent on consumer goods is a penny of capital that is consumed, never to be seen again.  Better that it be spent on capital goods, which increase production, and make EVERYONE richer.

But Keynesians are so stupid they can't even understand something that simple.

Sat, 10/15/2011 - 10:49 | 1776824 legal eagle
legal eagle's picture

Water piping used to all be copper, PVC baby

Fri, 10/14/2011 - 23:21 | 1776215 infinity8
infinity8's picture

exactly! - as someone who specialized in replacing metal parts with plastic for a long time/

Fri, 10/14/2011 - 23:24 | 1776219 infinity8
infinity8's picture

that said, the point about copper is right.

Sat, 10/15/2011 - 00:24 | 1776322 john39
john39's picture

But they do use plastic Noe in water feeds in residential construction in the US. There may be other similar substitutions.

Sat, 10/15/2011 - 01:02 | 1776368 infinity8
infinity8's picture

big picture, most copper applications are not well substituted in plastics. but a lot of other metals are - a Lot. now.

Sun, 10/16/2011 - 12:22 | 1778848 ljag
ljag's picture

And I am right behind you changing it back to copper because the glue doesn't hold up as well as the CPVC. LOL! Although I must admit I spend more time replacing galvanized iron pipe (to copper) than anything else. As to government........just what does the DOE do? We are more reliant on foreign oil for our energy than ever. Homeland Insecurity? What a joke! We could start by getting rid of both.

Sat, 10/15/2011 - 06:15 | 1776592 tankster
tankster's picture

Plastic,indeed! Copper's use in housing peaked in the early 70's. 

first to go were the D.W.V systems. Next, the hydronic heating systems, and more recently, water distribution

From peak to trough, thats roughly 800 lbs. per house! 

Sat, 10/15/2011 - 10:30 | 1776793 Howard Beale
Howard Beale's picture

Plastic's not a metal. Silicon is.

Fri, 10/14/2011 - 22:52 | 1776163 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

Color me a simpleton, but I can't figure out what to do with Dr. Copper from here...

 

Fri, 10/14/2011 - 22:58 | 1776174 devo
devo's picture

Hold or sell.

Sat, 10/15/2011 - 09:19 | 1776728 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

danx

 

Fri, 10/14/2011 - 23:02 | 1776181 blindman
blindman's picture

a local plumber recently lamented the use of plastic tubes
as replacement for copper water pipes. he claimed the plumber's
art is being eliminated. i have seen things that confirm this.
plumbing ain't what it used to be, neither is anything else,
for some time. the materials they are a changin', the quality
is in question. who would know the difference or care?
beats me.

Sat, 10/15/2011 - 09:21 | 1776729 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

It creates more work and cheaper inventory for him... what's not to like from his perspective? Either he educates his client on the relative merits of choosing plastic, so the heats off of him, or he looks like a greedy sumbitch who just likes to dink around on plastic frequently

Sat, 10/15/2011 - 10:44 | 1776814 tmosley
tmosley's picture

Not sure what you mean by "more work".  PEX is clearly superior to both PVC (which is brittle as hell) and copper (which deforms when water freezes inside).

PEX returns to its original shape after deformation, including from hard freezes.  My current home employs the same material (at my direction), and when we had a 50-year cold snap last year, and people around the entire area were having leaks all over the damn place, ours merely had to thaw, and we had no problems.

Sat, 10/15/2011 - 10:40 | 1776805 oddjob
oddjob's picture

There have been a myriad of plastic fitting systems for water distibution in the home, most all have failed over a period of 15 years or less. Poly-b, poly-e, cpvc all are garbage for use inside your home.

Sat, 10/15/2011 - 10:54 | 1776833 tmosley
tmosley's picture

Ah, the fallacy of conflating the properties of all plastics.

http://en.wikipedia.org/wiki/Cross-linked_polyethylene

Sat, 10/15/2011 - 12:26 | 1777050 oddjob
oddjob's picture

I have installed a lot of PEX, my only problem is that the crimped fittings have an i.d. smaller than the pipe size, unlike copper. Key to using pex is utilizing as few fittings(90's and T's) as possible using the home run system. Wirsbo makes a system that would be acceptable. But plumbers have a saying( amongst many others) 'copper is proper' 

Sat, 10/15/2011 - 12:55 | 1777098 tmosley
tmosley's picture

Sure, and buggy whips are the path to prosperity.

Sat, 10/15/2011 - 16:18 | 1777497 Hunch Trader
Hunch Trader's picture

35+ years of PEX plumbing systems,  floor heating etc. USA and globally.

 http://www.uponor-usa.com/en/Header/Systems/Plumbing/Homeowner/Overview.aspx

 

Fri, 10/14/2011 - 23:25 | 1776189 X.inf.capt
X.inf.capt's picture

impoverished us all?

yes, and the people are pissed...

 

 

Sat, 10/15/2011 - 07:18 | 1776625 Ghordius
Ghordius's picture

GDP = C + I + G + (X - M)

is only an accounting agreement

like Assets - Liabilities = Equity

 (House - Mortgage = your investment in your House)

-----------------

GDP is a question: Off the total of the "economic activity" of last year (GDP), which part was exported or imported (X-M), how much was reinvested in the economy (I), how much is lost because it was consumed by private households (C) and how much was lost because because it was consumed by the government (G).

The quality of the parts is more important than the totals, like in balance sheets.

Of course, the problem is that our western cultural direction was driven by growing the sum (GDP) without thinking about growing the quality of the parts.

MSM has a growth love story with (C) ->shop, baby, shop

Left parties have a growth love story with (G) ->spend, baby, spend

Conservatives have a love/hate story with (G) -> spend? hell, yes!

And Wall Street is convinced only they know what (I) is, even when they need (G) to keep up the bad quality they provided. -> the squid & co.

-------------------

Put it the way of a shopping list: of the USD 40k I make this year:

good (C): how much am I going to spend on my family and me that has value?

less good (C): how much do I have to borrow for it? (from I)? How much is wasted for frilly BS which I only do because I'm too lazy to do otherwise?

good (I): how much am I going to invest in profitable ways?

less good (I): how much am I going to "invest" in the growth of (G) and (C)?

good (X-M): how much am I going to export for future (C) or (G) or (I)?

less good (X-M): how much am I going to import now for more (C) or (G) or (I) and I will have to pay back later?

and now (G)

good (G): how much taxes am I going to pay for the services provided by the state, including protection from the enemies of my country?

less good (G): how much of my taxes are wasted? How much of the spending of this year is part of the (I) in form of sovereign debt? How much is it repayment of past (G)?

----------

the peddlers of (I) gang up with the peddlers of (C) and the peddlers of (G) and you know who loses? You and (I).


Sat, 10/15/2011 - 09:08 | 1776717 Thisson
Thisson's picture

You make a great point here about quality of the parts.

It's not the totals that matter, it's the quality.  Government spending isn't bad, per se, if it is used properly.  Investment isn't good, per se, if it's malinvestment.

 

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