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Forum Post: Does Government Spending Help

Posted 2 years ago on Dec. 30, 2011, 3 p.m. EST by Jflynn64 (337)
This content is user submitted and not an official statement

Does government spending produce higher employment. Many people here seem to believe it does. Some examples refute this claim

From 1929-1939, the great depression era, government spending as a % of GDP grew 283% while the labor force at work declined by 15%.

From 1946 - 1951, government spending as a % of GDP declined by 15%, while the labor force at work increased by 3.3%.

From 1954 - 1973, government spending as a % of GDP declined by 13%, while the labor force at work increased by 2.3%.

From 1973 - 1982, government spending as a % of GDP grew 28% while the labor force at work did not grow - 0%.

From 1982 - 2000, government spending as a % of GDP declined by 26%, while the labor force at work increased by 6.5%.

From 2007 -2011, government spending as a % of GDP grew 283% while the labor force at work declined by 15%.

The obvious question which is difficult to quantify is what is the multiplier effect - if at at all - of government spending?

5 Comments

5 Comments


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[-] 1 points by Teacher12 (-33) 2 years ago

Wow, powerful examples.

[-] 1 points by Fraqtive42 (87) from Herndon, VA 2 years ago

You guys are forgetting about countries like Norway, where government spending on welfare amounts to about 40% of the GDP. These countries still turn out fine.

[-] 1 points by kingscrossection (1203) 2 years ago

I am of the idea that we actually need to limit government control in business and on things like entitlement programs. Obviously regulations are not a bad thing but throwing to much money at a problem only tends to make it larger. Or at least that is the way it seems to me.

[-] 1 points by SteveKJR (-497) 2 years ago

The GDP has been on the decline from 1996 when Clinton signed the NAFTA agreement.

Government spending does not increase GDP and only provides a "temporary" fix.

Think about this:

When an individual running a small business pays $20,000 in taxes, that money is no longer productive. It can no longer be used by that business to buy more product to be sold, or to be used to hire employees.

The money that is given to the government in the way of taxes does not increase in of itself because it is not being used to produce a product by which a profit or gain can be made.

So, government spending does not contribute to making the economy grow or increasing the GDP does not work it only takes away.

It is the businesses and the people who make and spend money, contribute to the increase of the GDP and make the economy grow, not government spending.

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