First Stimulus, Now "Deficit Reduction".

[dcentity2000]

The government cannot create wealth. We've been over this a million times already.

They can print money, but that dilutes the currency.



Rich::

 

[SteveInBrooklyn]

The government pays a cop, right? Isn't the cops salary wealth? That's the govt. creating wealth, isn't it?

 

[JMD]

The government pays a cop, right? Isn't the cops salary wealth? That's the govt. creating wealth, isn't it?

No, it's not.

I have no doubt that the government is responsible for the employment of many paople. The critical word in question, however, is creating.

In order for the government to employ somebody, they need money. They can raise this money in one of three ways: by taxing their population, by printing more currency, or by borrowing it. All three of these mechanisms reduce the wealth of the population, the first directly, the second indirectly, and the third in the future.

By reducing the wealth of the population, the government reduces their ability to employ people, both directly and indirectly. In this way, jobs funded by the government are just taken from other areas, and not really created at all.

Not only that, but governments are notoriously inefficient at these transfers, and so the amount of employment "created" is always less than the amount of wealth taken. Look up Bastiat's parable of the broken window.

 

[SteveInBrooklyn]

No, it's not.

I have no doubt that the government is responsible for the employment of many paople. The critical word in question, however, is creating.

In order for the government to employ somebody, they need money. They can raise this money in one of three ways: by taxing their population, by printing more currency, or by borrowing it. All three of these mechanisms reduce the wealth of the population, the first directly, the second indirectly, and the third in the future.
By reducing the wealth of the population, the government reduces their ability to employ people, both directly and indirectly. In this way, jobs funded by the government are just taken from other areas, and not really created at all.

Not only that, but governments are notoriously inefficient at these transfers, and so the amount of employment "created" is always less than the amount of wealth taken. Look up Bastiat's parable of the broken window.

I still don't get it. I don't understand what your definition of wealth is. I don't understand what your definition of create is.

Let's see if the following scenario qualifies as "creation of wealth." Govt pays a teacher's salary. That teacher stuffs computer programming into the heads of kids. Those kids go out and get programming jobs, both public and private sector. The teacher is not creating wealth? The new public sector progeammers are not creating wealth? Only the new private sector programmers are creating wealth?

Here's another scenario. Govt builds a road, employing 50 road builders. Those 50 people need housing, food, clothing and so forth. They spend their wages to do this. The money goes from govt to road builder to merchant. Is it STILL not wealth? If the govt didn't pay the workers, the merchants would never have gotten this money.

FURTHERMORE, the new road leads to the development of new communities where there were none. Do you mean to say govt's. building of the road created NO WEALTH? I don't get it.

 

[CPT Tripss]

So the execs and stockholders of the big defense contractors got rich and powerful because they reached into our pockets and stole our money? Why to you laud the politicians who abetted them in these actions?

If the government didn't "create" their wealth, then the government must have redistributed your wealth and my wealth to those people. I don't like that one bit. I'd rather a portion of my wealth feed the hungry and put a roof over someone's head than buy a bomb and make some former elected official and defense industry tyco richer.

 

[JMD]

I still don't get it. I don't understand what your definition of wealth is. I don't understand what your definition of create is.

Let's see if the following scenario qualifies as "creation of wealth." Govt pays a teacher's salary. That teacher stuffs computer programming into the heads of kids. Those kids go out and get programming jobs, both public and private sector. The teacher is not creating wealth? The new public sector progeammers are not creating wealth? Only the new private sector programmers are creating wealth?

Here's another scenario. Govt builds a road, employing 50 road builders. Those 50 people need housing, food, clothing and so forth. They spend their wages to do this. The money goes from govt to road builder to merchant. Is it STILL not wealth? If the govt didn't pay the workers, the merchants would never have gotten this money.

FURTHERMORE, the new road leads to the development of new communities where there were none. Do you mean to say govt's. building of the road created NO WEALTH? I don't get it.

Where does the government get the money to pay the teacher's salary or to build the roads?

 

[SteveInBrooklyn]

Where does the government get the money to pay the teacher's salary or to build the roads?

The important thing is that the initial spending (which you don't call wealth, although it does get counted in GDP) leads to economic transactions in the private sector ultimately. So at least that can be said to create wealth. NO matter where the money comes from, if the govt hires street sweepers, wealth is created at least when the sweepers spend their wages at local merchants. I think that is something we both agree on. Right?

But I think I've made a good case that govt spending by itself creates wealth. The govt trained programmer I mentioned above. If he gets a public sector job there is no wealth creation during his entire career? I contend that the training leads to wealth creation, and the work the programmer does leads to wealth creation. What about the govt built road? If a community springs up around it, only members of the community who have private sector jobs are engaged in wealth creation? That makes no sense.

I think the issue here is that "wealth creation" is a fuzzy term. It's not too exact. Why don't we use GDP instead?

 

[wvjules]

Steve, the government is taking MY, YOUR and Others money to pay for those jobs. They aren't creating wealth; they are just redistributing it from my wallet to theirs.

 

[Geoff_M]

I still don't get it. I don't understand what your definition of wealth is. I don't understand what your definition of create is.

Let's see if the following scenario qualifies as "creation of wealth." Govt pays a teacher's salary. That teacher stuffs computer programming into the heads of kids. Those kids go out and get programming jobs, both public and private sector. The teacher is not creating wealth? The new public sector progeammers are not creating wealth? Only the new private sector programmers are creating wealth?

Here's another scenario. Govt builds a road, employing 50 road builders. Those 50 people need housing, food, clothing and so forth. They spend their wages to do this. The money goes from govt to road builder to merchant. Is it STILL not wealth? If the govt didn't pay the workers, the merchants would never have gotten this money.

FURTHERMORE, the new road leads to the development of new communities where there were none. Do you mean to say govt's. building of the road created NO WEALTH? I don't get it.

I think you're exhibiting a common mindset of liberals (and I don't say that to be flip, honestly). It's noted that many liberal think the economic "pie" is fixed in size. The only way one person can "get ahead" is for something to be lost by someone else. Creating "wealth" involves increasing the size of the pie. Using taxes collected to pay teachers or build roads is merely just moving money around ("spreading the wealth" as Obama would say to Joe).

And secondly, the Federal government spending money for the sake of spending money doesn't even promise to bring a benefit. The WaPo has pointed out some of sure fire folly of the Obama Stimulus Law. Often times it's just throwing money at things that the government seems ill equipped to handle. For example they note: "The Department of Housing and Urban Development is getting $1.5 billion for 'homelessness prevention,' a task in which it has never explicitly engaged." They also point to a Maryland program for home energy efficiency that is likely to be overwhelmed by the sudden increase in its budget by 57 times the current funding level. What is the likelihood that efficient spending in this case?

 

[JMD]

The important thing is that the initial spending (which you don't call wealth, although it does get counted in GDP) leads to economic transactions in the private sector ultimately. So at least that can be said to create wealth. NO matter where the money comes from, if the govt hires street sweepers, wealth is created at least when the sweepers spend their wages at local merchants. I think that is something we both agree on. Right?

But I think I've made a good case that govt spending by itself creates wealth. The govt trained programmer I mentioned above. If he gets a public sector job there is no wealth creation during his entire career? I contend that the training leads to wealth creation, and the work the programmer does leads to wealth creation. What about the govt built road? If a community springs up around it, only members of the community who have private sector jobs are engaged in wealth creation? That makes no sense.

I think the issue here is that "wealth creation" is a fuzzy term. It's not too exact. Why don't we use GDP instead?

You didn't answer my question. Where does the government get the money to pay teachers and build roads? That's the whole point here that you keep missing.

Government spending alone does not create wealth, regardless of what it does to total GDP. The more accurate measure is government spending as % of GDP. As that percentage increases the economy shrinks.

 

[PeterPan09]

I think you're exhibiting a common mindset of liberals (and I don't say that to be flip, honestly). It's noted that many liberal think the economic "pie" is fixed in size. The only way one person can "get ahead" is for something to be lost by someone else. Creating "wealth" involves increasing the size of the pie. Using taxes collected to pay teachers or build roads is merely just moving money around ("spreading the wealth" as Obama would say to Joe).

So if that money doesn't come from the government-where would the money come from to pay for teachers and build roads?

 

[loco4dis]

The important thing is that the initial spending (which you don't call wealth, although it does get counted in GDP) leads to economic transactions in the private sector ultimately. So at least that can be said to create wealth. NO matter where the money comes from, if the govt hires street sweepers, wealth is created at least when the sweepers spend their wages at local merchants. I think that is something we both agree on. Right?

But I think I've made a good case that govt spending by itself creates wealth. The govt trained programmer I mentioned above. If he gets a public sector job there is no wealth creation during his entire career? I contend that the training leads to wealth creation, and the work the programmer does leads to wealth creation. What about the govt built road? If a community springs up around it, only members of the community who have private sector jobs are engaged in wealth creation? That makes no sense.

I think the issue here is that "wealth creation" is a fuzzy term. It's not too exact. Why don't we use GDP instead?

There's absolutely nothing "fuzzy" about it. No private sector growth and profits? No funding for government programs, jobs, whatever. As I said earlier, those on the left who seem to love "government-funded" programs should be the most ardent capitalists of all — cuz capitalism pays for ALL of it. Government programs are capitalism's gift to the electorate, yet so many want to slap the hand that feeds them. I really don't get it.

 

[JMD]

Steve, the government is taking MY, YOUR and Others money to pay for those jobs. They aren't creating wealth; they are just redistributing it from my wallet to theirs.

I think you're exhibiting a common mindset of liberals (and I don't say that to be flip, honestly). It's noted that many liberal think the economic "pie" is fixed in size. The only way one person can "get ahead" is for something to be lost by someone else. Creating "wealth" involves increasing the size of the pie. Using taxes collected to pay teachers or build roads is merely just moving money around ("spreading the wealth" as Obama would say to Joe).

 

[SteveInBrooklyn]

You didn't answer my question. Where does the government get the money to pay teachers and build roads? That's the whole point here that you keep missing.

Government spending alone does not create wealth, regardless of what it does to total GDP. The more accurate measure is government spending as % of GDP. As that percentage increases the economy shrinks.

So in none of my examples is any weatlh created???? Not the road that leads to a new community? Not the job training that leads to highly skilled govt workers? Ok, let's agree to disagree.

As for govt spending as a % of GDP: fiscal stimulus decreases that %. Yes, govt spending will increase, but the increase in GDP will offset it, and the % decreases. In a shrinking economy (as we have now) that % increases because spending stays the same and GDP contracts. That's why fiscal stimulus is important.

 

[SteveInBrooklyn]

Above, I'm talkng about the increase in GDP caused by the govt spending AND the private spending it stimulates.

 

[JMD]

So in none of my examples is any weatlh created???? Not the road that leads to a new community? Not the job training that leads to highly skilled govt workers? Ok, let's agree to disagree.

As for govt spending as a % of GDP: fiscal stimulus decreases that %. Yes, govt spending will increase, but the increase in GDP will offset it, and the % decreases. In a shrinking economy (as we have now) that % increases because spending stays the same and GDP contracts. That's why fiscal stimulus is important.

Still didn't answer the question.

 

[NYDisGuy]

No, it's not.

They can raise this money in one of three ways: by taxing their population, by printing more currency, or by borrowing it. All three of these mechanisms reduce the wealth of the population, the first directly, the second indirectly, and the third in the future.

What about fundraisers, auctions, programs, etc.?

 

[JMD]

Above, I'm talkng about the increase in GDP caused by the govt spending AND the private spending it stimulates.

How does government spending stimulate private spending?

 

[JMD]

What about fundraisers, auctions, programs, etc.?

Are you suggesting the government can raise 1 Trillion dollars by fundraisers and auctions? That would be one killer bake sale.

 

[PeterPan09]

What about fundraisers, auctions, programs, etc.?

You're kidding, right? The Orange County SD is facing a $125 million shortfall for next year. Do you really expect them to sell cookies to make up that kind of loss???