Forum Post: Economics Lesson
Posted 13 years ago on Oct. 13, 2011, 5:39 a.m. EST by armchairecon
(138)
This content is user submitted and not an official statement
The government requires a growing economy to pay for growing costs (SS, medicaid/medicare, education, security, etc). A growing economy requires a tax base (income/sales tax). More sales = higher corporate profit = hire more people who can spend more money and perpetuate the cycle (more tax revenue).
Thus the government is structured in a way that REQUIRES a growing economy, aligning their interests with corporate interests (ie: higher profits). The converse of this is that a growing economy implies/requires increased household spending and the government benefits/depends on a low savings rate.. this perpetuates eventual dependence on government welfare (ie: health care/SS). Also, government dependence on high spending requires a low interest rate (which conversely decreases bank profits).
Solution: 1) decrease government size/cut/stabilize costs so policies are not dependent on a growing economy
2) increase individual accountability so there is less dependence on public benefits (wean current generation off of SS, make them responsible for their own future)
ie: when a person who makes 30k/yr spends 1500$ on an iphone/cellplan, that is wreckless spending, poor financial decision, but the government benefits because apple and ATT makes money, they get sales taxes/fees and apple/ATT keeps on hiring... but that poor financial decision means that person can't save that 1500/yr for 30 yrs at compounded interest for their retirement, increasing their dependence on SS
Best post and follow on comment on this entire forum. Awesome.
To your 1) I know the right wing/GOP likes to slash spending on social programs. But they are doing it wrong. They have the right idea. They are just going about it the wrong way. The waste is because of all the BS that is in the govt that is not necessary. When the budget is slashed they just downsize the overall picture.
But the problem is there is a lot of unnecessary waste in the actual bureaucracy. I believe it was the Obamacare bill that was 900 pages long or something. That is ridiculous and this is the norm. They over complicate the system so they can sneak stuff through ( riders) it has become standard operating procedure.
Look at our first amendment. Look at the original version then look at the current version. It is bloated with a bunch of crap. We should not need permission from the government to protest the government on public land we pay for. That is the most absurd thing i have heard of.
Immigration, i can tell you first hand is a nightmare. It is costly for even an American, very time consuming and very frustrating and totally unneeded for it to be that way. It could be simplified and be much more efficient and cost much less because its efficient.
The government is highly inefficient because it is full of stupid laws clauses and other BS that are counter productive. If we focused on this we could really make the govt more efficient and cheaper to run without cutting programs.
Your 2) SS is a entitlement program. Now the politicians got people thinking that an entitlement program is bad. It is not. Entitlements are something you are entitled to because you paid into it. SS would be fine right now except for three things: 1) Congress stole from the SS trust fund( and i bet the wont give it back with interest) 2) We had an influx of people retiring or who will retire. This is because we had a sort of "bubble" generation we call the baby boomers. Population growth is usually fairly steady. Due to WWII and then the baby boomers after the war it exploded. 3) Inflation. We are a greedy nation. Without going into the economics of it. We basically caused everything to be more expensive by buying everything on credit. We are a nation of must haves. You iphone example is a great example because a cell plan and the attached phone is really a credit plan. Credit cards are terrible. If you have a credit card you need to cut it up and throw it away. All this greed cause artificial demand which is basically you have possession of something but you dont actually own it( cause you havent paid for it yet). Which causes prices to go up.....artificially. Which causes inflation. And since SS payments are tied to the inflation rate/cost of living rate( i know my mom is on them) They would stop going up and the money from those payments would go a lot further than the inflated payments go now. Everyone wins.
If we stopped buying stuff on credit except maybe housing and even that if possible and bought what we could afford you would see the cost of everything drop to about 1/3 to 1/2 of what it is now.
In short stop buying stuff on credit. Everyone. You are only contributing to the problem we have now with your own personal greed. Trust me, you will have a lot less stress and a lot less sleepless nights. I pretty much sailed through this recession and i dont even make enough to be considered middle class. Because i own my vehicle and i own my house( at 33) but i also settled for less. I do splurge but i always pay out of pocket. So what i buy i actually own. The only exception is my cell phone which was $100 and i have had for almost 3 years.