A reply on a Krugman article (http://krugman.blogs.nytimes.com/2011/08/12/the-cracked-conservative-mirror/) stated this, and I just can't wrap my mind around it:
Private sector cannot realize profits in monetary sense unless the govt issues the appropriate deficit, a conclusion that is mathematically true, but which "free marketers" absolutely hate. http://www.levyforecast.com/assets/Profits.pdf Government deficits are necessary for economic growth, period. http://www.tnr.com/article/politics/93365/no-long-term-deficit-problem
Is this guy making any sense?
This has the effect of directing lots of resources from potential new buisness ventures, and instead distributes them to the various government projects, which may or may not be increasing wealth in the society. For example, instead of money being invested in a new shoe factory, it's invested in new tanks and fighter jets. This has the effect of building new fighter jet and tank factories, but the question is "do we really need more of these"? For the weapon producers, the answer is probably yes. But for society at large? Probably not. This goes down the line through most government expenditures. Do we really need that new bridge? Well, the bridge might actually be needed and useful. It may benefit the people who will use it greatly, but how do you know if it's a net wealth producer for society? How do you know that those resources wouldn't be better invested elsewhere? This is the classic seen-and-unseen problem, combined with the inability of a state enterprise to calculate proper prices without the profit-loss model.
But when the government takes the money through bonds and spends it on tanks, then the money is back in private hands. The government always gives money to private individuals. So wouldn't the tank manufacturers be able to spend the money on the same things that the bondholders would've spent it on? Or are you saying that the bondholders are "better" at spending the money than the tank manufacturers?
However the private sector surplus is not limited by government deficit, as they can produce more wealth independent of government action.
And how do you measure that wealth?
How do you equate tank manufacturers with the public? Tank manufacturers are a product of the gunvernment whose market wouldn't exist without them. .
You can measure the private sector wealth creation in increases in standard of living across all facets of society instead of just the chosen few supported by the government.
We are the soldiers for righteousnessAnd we are not sent here by the politicians you drink with - L. Dube, rip
How do you equate tank manufacturers with the public? Tank manufacturers are a product of the gunvernment whose market wouldn't exist without them.
So when an employee of a tank manufacturer spends money on a house, that counts as public spending and not private spending? When the house manufacturer then goes to spend the money he received from the tank manufacturer, does that count as public spending as well? After all, he wouldn't have that money without the government. Thus, by your standards, everything is government spending.
(I assume you meant: "How do you equate tank manufacturers with the private sector?")
How do you measure standard of living?
When the gov. spends $1,000 on a tank, only $1 is earned by the tank factory worker who might go spend it on a house. Here is an example of public ($1,000) and private ($1) spending.
The economy is hurt not by the worker spending his dollar on whatever they so choose, but rather by the government stealing the $1,000 from the public and forcing them to buy a tank. In a free market, this $1,000 would have been used more efficently enrichening many actors instead of a chosen few.
I measure the standard of living by looking at the past.
My great grandma had a wash board, my grandma had an automated open wash tub with wringer attachment, my mom had a fully automatic wahing machine. My wife enjoys the convience of a fully automatic washer and dryer.
When I was 7, I'd buy boxes of pistol cartridges at the local hardware store and enjoy a day of plinking bottles and cans at our private range. If my seven year old attempted to buy cartridges today, he'd be in state custody and I'd be in jail.
Its a shame the government didn't subsidize and force the market of years long gone to grant my great grandma the right to have a washer and dryer. She would have been better off for it ergo I would have been better off for it.
I still don't understand. Where does the other $999 go if not to the private sector?
Nowhere profitable. If the money goes to pay a public servant, it funds a job that doesnt need to exist. That public servant could get a real job in the private sector, and he would contribute to the supply of goods and services that people actually want and are willing to pay for.
But that just takes the current distribution of property for granted. They might be willing to pay for those goods and services if they had more money. Because people in Africa can't afford food doesn't mean that they don't need food.
>>>>But that just takes the current distribution of property for granted. They might be willing to pay for those goods and services if they had more money. Because people in Africa can't afford food doesn't mean that they don't need food.>>>>
current distribution of property is one of the few givens in philosophical problems. Or is your beef with reality? Do you have a system of values you wish me to adopt? Lets hear it.
>>>>Because people in Africa can't afford food doesn't mean that they don't need food.>>>>
if the need food so bad, why dont you go give it to them?
Well, taxation going to pay public servants is a given as well. Is your beef with reality?
Just because a need exists doesn't mean I have to satisfy it.
>>>>Well, taxation going to pay public servants is a given as well. Is your beef with reality?>>>>
How is a potential act in the future a given?
>>>>Just because a need exists doesn't mean I have to satisfy it.>>>>
I apologize. I assumed something about your definition of "need."
Oh, I thought you were complaining about money currently being spent.
Water under the bridge.