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Does governnent spending produce economic growth?

Does governnent spending produce economic growth?

  • Total voters
    46
iacardsfan said:
No, I simply think we could be richer.
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We become richer by producing. Producers only produce the quantity that they expect that they can sell, and they only hire the number of workers that they need to produce that quantity of goods and services. Most Americans already spend every penny that we can get our hands on, thus the only way we could become a richer nation is if consumers had more money to demand with.

If we want to be richer, then our battle cry should be: "Pump Baby, Pump!"
 
American said:
Oh yeah, businesses don't add to the economy only government. :roll:
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No, remember that we have already determined that the private sector is meeting demand, and thus doing all they can. Every shelf at Walmart is filled, and every new car lot has ample cars to sell.

For more wealth to be created, demand has to increase. For demand to increase, consumers have to have a few more bucks in their pocket. There are three ways for that to happen, the first is if wages start exceeding the inflation rate, the second is if taxes of the consumer class are reduced, and the third is if government stimulates demand by spending more.
 
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imagep said:
No, remember that we have already determined that the private sector is meeting demand, and thus doing all they can. For more wealth to be created, demand has to increase.
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I guess it must be the lack of those shovel-ready jobs.
 
American said:
I guess it must be the lack of those shovel-ready jobs.
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That was an issue. It was largely a leadership issue. Obama and his crew certainly hold blame, as do republican governors who refused to accept stimulous money.
 
imagep said:
Yup, hyper inflation is always just around the corner.

Fortunately, we never seen to make it to that corner.
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The deflation trap is probably worse than hyperinflation.
 
Declan said:
The deflation trap is probably worse than hyperinflation.
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Absolutely.

I suspect that's part of the reason why the federal reserve sets a target rate of just over 0%. It's almost impossible to exactly hit a target ever time, so it's better to err on the side of a slight amount of inflation, rather than to risk any deflation.
 
imagep said:
Absolutely.

I suspect that's part of the reason why the federal reserve sets a target rate of just over 0%. It's almost impossible to exactly hit a target ever time, so it's better to err on the side of a slight amount of inflation, rather than to risk any deflation.
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Plus a little inflation is typically good for the economy. Overtime it makes big debts smaller.
 
iacardsfan said:
You pump enough capital into any economy and it will grow. That does not make it correct or sustainable.
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Government does not “pump capital into any economy”. Government cannot give what it hasn't taken from someone else. Every dollar that government “pumps” into some part of the economy is a dollar that it took out of some other part of that same economy.
 
mak2 said:
Start selling arms to the military. Big growth industry.
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But where did the military get the money to pay for the arms? Taxes. just tax as little as possible and people will spend the money on stuff they actully want and thus cause the economy grow even more.
 
MildSteel said:
It doesn't necessarily have to come from someone. The U.S. government prints money all the time.
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Printing more money does not create wealth. Money and wealth are not the same thing. Money is a unit by which wealth is measured and exchanged. All that printing more money does is to devalue that money, so that each unit thereof represents less wealth than it did before.
 
American said:
The question is not whether it produces economic growth, the question is....is it the most efficient way to produce economic growth?
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...and the most efficient way depends on the circumstance. For example, in an economic slump, when businesses pull back and will not invest, the government is the only entity that is large enough and not hampered by having to deliver an uptick in next quarters eps, that it is uniquely positioned to "stimulate" demand in the economy.
 
Bob Blaylock said:
Government does not “pump capital into any economy”. Government cannot give what it hasn't taken from someone else. Every dollar that government “pumps” into some part of the economy is a dollar that it took out of some other part of that same economy.
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I understand that. It is theft and they redistribute it from the top down. On top of that they manipulate interest rates so people take out loans and capital flows into the market. All of this is false economic growth.
 
MildSteel said:
It doesn't necessarily have to come from someone. The U.S. government prints money all the time.
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Even then it 'comes from someone' I think you will find. The mechanism just more complicated. The take runs via the goods and prices and is not so visible.
 
upsideguy said:
...and the most efficient way depends on the circumstance. For example, in an economic slump, when businesses pull back and will not invest, the government is the only entity that is large enough and not hampered by having to deliver an uptick in next quarters eps, that it is uniquely positioned to "stimulate" demand in the economy.
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But it your progressive world, it doesn't happen only then. In the progressive world the govt is spending huge 24/7/365.
 
SouthernDemocrat said:
Plus a little inflation is typically good for the economy. Overtime it makes big debts smaller.
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Yeah, that's the game we play with China!!! Damn, they must feel like big suckers!!! :lamo
 
joG said:
Even then it 'comes from someone' I think you will find. The mechanism just more complicated. The take runs via the goods and prices and is not so visible.
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No it doesn't necessarily. No one is knocking on the Federal Reserve's door forcing it to pay all that bad debt on it's books.
 
Bottom line, as long as the people of the world keep accepting dollars, the Fed can keep printing as much money as it likes.
 
What they need to do is start printing money to create jobs for people who want to work, instead of printing money to bomb Muslims in Iraq, Syria, and Afghanistan. It's amazing. There is always plenty of money for killing people, but no money for giving people jobs. What kind of whack crap is that?
 
MildSteel said:
In addition to my regular job, I have been trying to develop a business. I have noticed two years in a row now that I experience a great boost in sales after people get income tax refunds. Now I realize that in that case, mostly people are simply getting back their own money. But it makes me wonder, does government spending produce economic growth? If I understand them correctly, some say that this is never true. What do you think?
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Obama has spent a trillion a year for the past 6-years.
Where is the growth?
Where are the jobs?
WTF happened to all that money?
The Libs smartest man in the world failed with that mountain of cash. How can it be? ROTFLOL...

Government is a machine designed to waste. The smaller it is... the better.

When Reagan came to office, the highest tax rate was 70%. He closed loopholes, reduced the highest rate to 28% and in doing so built the foundation for decades of economic growth.

Government takes from the people in order to spend. The money is far better off in our hands, than some socialist who wants to engineer society his way.
 
zimmer said:
Obama has spent a trillion a year for the past 6-years.
Where is the growth?
Where are the jobs?
WTF happened to all that money?
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It went to bail out you buddies at the big banks. You know those people in the private sector who you say know how to benefit the economy.

zimmer said:
When Reagan came to office, the highest tax rate was 70%. He closed loopholes, reduced the highest rate to 28% and in doing so built the foundation for decades of economic growth.
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Ronald Reagan doubled and tripled deficit spending. Not only that but the debt went up TWO TRILLION dollars on his watch. Yep, one for the Gipper!

zimmer said:
Government takes from the people in order to spend.
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Well Reagan sure gave us plenty of debt. We can thank him for that.
 
zimmer said:
When Reagan came to office
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That apple is so juicy, I'm going to take another bite. I'll let Dick Cheney himself do the talking

"You know, Paul, Reagan proved that deficits don't matter."
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So there you have it folks, even Dick Cheney says that deficits don't matter and that Ronald Reagan proved it.

So the government needs to start spending money to create jobs for people who want to work.

Bush Sought 'Way' To Invade Iraq? - CBS News
 
cpwill said:
You are looking only at what is seen, and not what is unseen.

The problem with government spending is that the government has to get every dollar it spends. It's not that you can just add up all the expenditures and claim victory - there is an opportunity cost. Every dollar that the government doesn't borrow or tax is a dollar that would otherwise have been put to some other use. So the answer to "does it create growth" is "if it is allocated more efficiently than it would have been on the market, or if it solves a tragedy of the commons that allows growth to increase". For example, investment in transportation infrastructure (roads. canals.) can boost growth, and investment in basic security of property rights and enforcement of contract (police. military) boost growth can boost growth. Spending on cowboy poetry festivals and spending-for-the-sake-of-spending... less so.
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I think you gave a good example wrt spending on infrastructure, etc. I would say in addition to that proper expenditure on education can also boost growth. Furthermore, spending for the sake of spending is ridiculous, so I agree with that.

Where I tend to disagree with you is your point on every dollar that is not taxed or borrowed is money that would have otherwise been put to use. Although technically the Federal Reserve is not a part of the government, it is empowered directly by the government. As such it is an extension of government power. That being the case, the trillions of dollars that the Federal Reserve spent to buy up toxic assets is money can be viewed as an extension of government spending, and is money that came out of nowhere. It was created simply by an entry in a computer, nothing more. It is not money that otherwise would have been put to use.

That said, your post was decent.
 
MildSteel said:
It went to bail out you buddies at the big banks.
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They're not my buddies. I was against propping up the banks.

Let them fail and be bought up by whoever saw value in the carcass. Same with GM. Can't cut it under current management. No problem, someone will buy you.

Ronald Reagan doubled and tripled deficit spending. Not only that but the debt went up TWO TRILLION dollars on his watch. Yep, one for the Gipper!
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You really should get your info from places beyond democraticunderground.com

Reagan made an agreement with the then monopoly for 40-years Demokrat Congress to reduce taxes, close loopholes and reduce spending. Demokrats saw the money puring in and did what they do best... spend, spend, spend.
 
zimmer said:
They're not my buddies. I was against propping up the banks.

Let them fail and be bought up by whoever saw value in the carcass. Same with GM. Can't cut it under current management. No problem, someone will buy you.
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But they are the part of the private sector that YOU say knows so much better than the government on how money should be spent. Not only that, but your buddy Hank Paulson was telling everybody that if we didn't bail them out EVERYONE INCLUDED YOU was going to do down. Don't throw your buddies under the bus.

zimmer said:
Reagan made an agreement
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Again, this from Dick Cheney

"Reagan proved that deficits don't matter."
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Yep, that's what he said. NO DOUBT ABOUT IT. Since that's the case, the government needs to start spending money to create jobs for people who want to work.
 
MildSteel said:
No it doesn't necessarily. No one is knocking on the Federal Reserve's door forcing it to pay all that bad debt on it's books.
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As I said, it is more complicated. The government is buying a lot of private goods and distorting away from the efficient production. The money is going into the financial system and reducing interest rates via the FED, which is buying bonds and squirting money into the banks and general financial sector. The consequences are widely visible in the price of bonds through shares. We are paying via a sub-optimal allocation in the economy. What is nice for politicians is that the harm being wrought and the loses being made are hard to attribute directly. It is similar with a little other slant as with Clinton. The harm is hard to attribute and quantify even when the bubble pops. That is why there is so much finger pointing. The public just cannot tell, how it all hangs together.
 
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