Uh... no.

[color="#CCCCCC"] People like you and I (or "business leaders") make the experience that when you cut wasteful spending, you will be able to affect your balance in the intended way: your spending will be reduced, your income will remain the same.[/quote]

In what business can you decrease spending and maintain income What business school taught you that?

In microeconomics and macroeconomics, decreased spending equates to decreased income. Like business, like government - you cut back on production or services, you will receive less income because your output is decreased. Economics 101.

If anything you have this completely backwards. If a government reduces taxes, this puts more money in the pockets of people giving them purchasing, startup, and investment power, which can in turn bring government revenue back up to previous levels. This is evident throughout US history.

[color="#CCCCCC"] The US government must raise taxes, but the reason it must do so is to ensure the value of its currency. [/quote]

[color="#CCCCCC"] In general, the US government will have to tax less than it spends even in the long run if it wants the economy to be at full employment.[/quote]


First of all, no. Taxes do nothing to ensure the value of a currency.

Second of all, you do realize these two sentences contradict eachother. The reason the value of US currency is tanking is because of deficit spending.



I suggest you think next time before you boldy call something "nonsense". Also, please don't vote.

[color="#cccccc"] People like you and I (or "business leaders") make the experience that when you cut wasteful spending, you will be able to affect your balance in the intended way: your spending will be reduced, your income will remain the same.

In what business can you decrease spending and maintain income What business school taught you that?
[/quote]
Every time a business streamlines their processes to produce the same output at lower costs they decrease their spending while maintaining income. If you didn't learn that, then you'd better not start a business. Every time you as an individual reduce your spending by buying fewer or cheaper products, you decrease your spending while maintaining income.

If anything you have this completely backwards. If a government reduces taxes, this puts more money in the pockets of people giving them purchasing, startup, and investment power, which can in turn bring government revenue back up to previous levels. This is evident throughout US history.
[/quote]
If you truly believe that, then why do you doubt the fact that increased government spending - which also puts more money in pockets - usually also raises government revenue? Your position seems to be self-contradictory.

[color="#cccccc"] The US government must raise taxes, but the reason it must do so is to ensure the value of its currency. [/quote]

[color="#cccccc"] In general, the US government will have to tax less than it spends even in the long run if it wants the economy to be at full employment.[/quote]
First of all, no. Taxes do nothing to ensure the value of a currency.
[/quote]
Stated with the air of superiority without anything to back it up.

Taxes are an enforced debt. Government has the monopoly of power, and part of that power is to force a tax debt on you. This creates a demand for its currency (because you need to obtain the government's currency to pay your taxes - try paying your taxes with something else if you don't believe me), and thus serves as a backing of the value of the currency.

Second of all, you do realize these two sentences contradict eachother.
[/quote]
No, they don't. Taxes are need to maintain the value of a currency, but that is just a qualitative statement. How much taxation is needed to maintain the value of a currency depends on a range of factors, including the private's desire to save. Depending on that, the amount of taxation needed may be larger or smaller than the amount of government spending, but rarely will the optimal amount of taxation be exactly equal to the amount of government spending. Assuming that the non-government sector attempts to save in net financial assets in the long run, the government must run a budget deficit in the long run to match this desire to save, or else the resulting conflicts will lead to unemployment - which is exactly what is happening in many countries in the world right now: the private sector is attempting to save more at the same time as the government also attempts to save by cutting back spending. This is not possible at the same time, and the weakest economic actors suffer from this conflict. Seriously, read up on the framework of national accounting and the sectoral balances, e.g. again at this link.

I suggest you think next time before you boldy call something "nonsense". Also, please don't vote.
[/quote]
Thank you for the personal attacks, they're so classy.

Don't want this to turn into a flame war, I have nothing personal against you. Just this argument.

1.) Streamlining and cutting spending are not the same thing. Streamlining assumes there is wasteful spending that can be cut. Cutting spending does not make this assumption, and outside of trimming the fat, always reduces income.

2.) Taxes control the value of money just as much as any other business. Try buying groceries without cash.

3.) Unemployment, in the US at least, has much more to do with the state of the markets than private companies just trying to hoard cash. If companies don't need to hire people, the don't hire people. If they need to, they will. The problem is that businesses don't want to expand because they currently can't compete in just about every big market.

4.) No personal attack, I was just foreseeing this quote:

[color="#CCCCCC"]

If you truly believe that, then why do you doubt the fact that increased government spending - which also puts more money in pockets - usually also raises government revenue? [/quote]

[color="#CCCCCC"]which nails you as a democrat. I simply don't want any democrat to vote, because of this ideology. I simply don't believe increased government spending ever distributes money efficiently or effectively, and hardly ever puts money in the RIGHT pockets for improving the economy. Look at every government program if you want evidence. It's a shame, the democrats usually have the social issues right, but fiscally are just wrong.

[color="#CCCCCC"]Where's the socially liberal, fiscally conservative party?

Don't want this to turn into a flame war, I have nothing personal against you. Just this argument.

Fair point.

1.) Streamlining and cutting spending are not the same thing. Streamlining assumes there is wasteful spending that can be cut. Cutting spending does not make this assumption, and outside of trimming the fat, always reduces income.
[/quote]
Please re-read my earlier post. I did put the adjective "wasteful" in there for a reason. Of course I am aware that e.g. cutting spending on advertisements may reduce your income.

However, this still remains a different mechanism from what happens on a macro-economic level. If a business cuts spending on advertisements, this may reduce their income because their market visibility drops. If the government cuts any kind of spending - whether wasteful or not - this reduces income of the private sector, and the income of the private sector is where taxes ultimately come from.

Note that this is only partially a qualitative property of government. It is a qualitative property of the government because the government's income stream comes from everybody in the entire economy (obviously at different levels depending on the individual's tax situation, but nevertheless, everybody is affected by taxes). On the other hand, a very large corporation that spreads across the entire economy - let's say, one that accounts for 10% of GDP - would see the same effects. It's just that (thankfully, in my well-founded opinion) no such large corporations exist, and so this part of the effect that is caused by sheer size can only be seen in the government.

2.) Taxes control the value of money just as much as any other business. Try buying groceries without cash.
[/quote]
The qualitative difference is that except for taxes, this reasoning is circular. You buy groceries using cash because the grocer needs that cash to pay her suppliers and her employees. The employees are willing to work for cash because they can use it to buy groceries. That is a large part of where the value of money comes from, but it is ultimately always circular reasoning. Taxes do not have this circularity. A tax liability is forced onto you whether you like it not. Nobody besides the government has the power to force such a liability on you.

3.) Unemployment, in the US at least, has much more to do with the state of the markets than private companies just trying to hoard cash. If companies don't need to hire people, the don't hire people. If they need to, they will. The problem is that businesses don't want to expand because they currently can't compete in just about every big market.
[/quote]
Private companies in the US actually do hoard cash in unusually large amount, but I agree that that's not the primary cause of unemployment. The primary cause of unemployment is simply a lack of aggregate demand.

Now you might say that there is a lack of demand seen by US companies because people would just rather buy cheap Chinese imports. Okay. Then again, why not profit from these imports (after all, you get to enjoy real, tangible products in exchange for something virtual) and raise aggregate demand by other means so that you get to enjoy e.g. high quality services on top of that. This would be an increase of your standard of living.

(As a side note, I find it kind of frustrating that many people who argue points similar to yours seem entirely unable to imagine that a better world with higher living standards is possible, and they basically argue for mediocrity instead.)

4.) No personal attack, I was just foreseeing this quote:

[color="#000000"]

If you truly believe that, then why do you doubt the fact that increased government spending - which also puts more money in pockets - usually also raises government revenue? [/quote]

[color="#000000"]which nails you as a democrat. I simply don't want any democrat to vote, because of this ideology. I simply don't believe increased government spending ever distributes money efficiently or effectively, and hardly ever puts money in the RIGHT pockets for improving the economy. Look at every government program if you want evidence. It's a shame, the democrats usually have the social issues right, but fiscally are just wrong. [color="#000000"]Where's the socially liberal, fiscally conservative party?
[/quote]
So what? You have to be able to separate the economic questions from the political. The economic truth is that both an increase of spending and a decrease of taxation by the government can improve the economy and therefore increase government revenue, if the circumstances are right and the spending/tax-reduction is targeted in the right way.

Please don't confuse that with your own personal and ideological distaste for government. It would be perfectly fine for you to say "Yes, you are right, decreasing government spending can hurt the economy, but I would do it anyway because I don't like government." You might then go on to explain how you would complement the hurtful policy with some other policies to actually improve the economy. This way, we could have a much more productive discussion.

As far as whether tax reduction or spending is the better option to stimulate the economy in the US right now, we'd have to go into discussions about multiplier effects and so on. I'm not an econometrist, but just intuitively it seems to me that the main problem is that the people who have the lowest marginal savings rate are currently the ones who would not benefit from federal tax reductions, and so reductions wouldn't help much. Another argument in that direction comes from Richard Koo, who plausibly argues that the US is in a balance sheet recession.

Outside of the current situation, I believe tax reduction vs. spending is the wrong question to ask politically. The right political question to ask is "What should government be responsible for?" Once you know that, the right amount of spending becomes obvious, and once you know the right amount of spending, you can adjust the amount of taxation accordingly to achieve full employment with price stability.

For example, if I were a US citizen, I would clearly be in favour of cutting spending - in the military budget - because I believe that a country's military ambitions should be limited to effective defence, which is not what the US military is engaged in at the moment. But I would also be in favour of huge infrastructure projects, for example to upgrade the electrical grid, to build huge hydroelectric pump storages in the Rockies and Appalachians, and fill New Mexico and Arizona with solar power plants. I would also be in favour of massive, strictly per-capita financial support to the states and local governments to help them weather the shock of the recession. Finally, I would be in favour of implementing a Job Guarantee program, by which any local government or non-profit organization with socially beneficial purposes can offer federally funded jobs at a minimum wage for anybody who is willing and able to work.

But keep in mind that those are political choices (well, except for the last one, which is also founded on the economic idea that a price-based policy with flexible quantity is preferable to a quantity-based policy with flexible prices to achieve full employment at the same time as price stability). It is possible to separate the politics from the economic analysis, and if we agreed to do that, we could have much more useful discussions.

Finally, because I do find it disconcerting: Are you sure you're not an enemy of democracy? Your comments about voting are quite extremist.

[color="#cccccc"]Where's the socially liberal, fiscally conservative party?

damn right holmes. Libertarianism is as close as it gets right now I think.

It would be perfectly fine for you to say "Yes, you are right, decreasing government spending can hurt the economy, but I would do it anyway because I don't like government." You might then go on to explain how you would complement the hurtful policy with some other policies to actually improve the economy. This way, we could have a much more productive discussion.

I think you just asked him to completely drop his views and adopt yours. Doesn't sound very productive to me.

At any rate, I am of the opinion that government spending is by nature inefficient. See calculation problem.

[quote name='Prefect' timestamp='1297944599' post='4775368']
It would be perfectly fine for you to say "Yes, you are right, decreasing government spending can hurt the economy, but I would do it anyway because I don't like government." You might then go on to explain how you would complement the hurtful policy with some other policies to actually improve the economy. This way, we could have a much more productive discussion.

I think you just asked him to completely drop his views and adopt yours. Doesn't sound very productive to me.
[/quote]
Not really. I admit that it may seem like a subtle point, but it's an important one, because it's about the difference between facts and opinions, and about honesty in argument. Be honest about why you are arguing for certain things. In the current case, it is a difference between arguing two things:

1. That a decrease in government spending will not hurt the economy or may even help the economy.
2. That government spending should be decreased.

If you are arguing point (1), then you are making an argument about how the economy will react to a change in economic policy, and it is pretty clear that trying to argue that is a lost cause. Reducing government spending hurts the economy, especially in the current economic climate. This is clear from theoretical economic models, and you have to look no further than Greece and the UK to see it happening right now in practice.

If you are arguing point (2), then you are making a political statement, which is fine with me. I would disagree, but people have different opinions all the time.

So what I am asking him is to face the reality that following through on point (2) in the US is going to hurt the economy. There's nothing wrong with admitting that if you have a backup plan / counteracting policy at the ready to help the economy, or if happen to want to hurt the economy (but I doubt that's the case).

At any rate, I am of the opinion that government spending is by nature inefficient. See calculation problem.
[/quote]
I'm tempted to simply say Your Opinion Is Wrong or, to be more precise, Your Opinion Contradicts Reality.

The longer answer is that you have to clarify what you mean by "inefficient". When it comes to providing services for which there is no natural state of competition, government is routinely more efficient than private enterprise if you consider the cost to society.

As an example, many municipalities in Germany are currently de-privatising their trash collection, with the result that the fees for trash collection are going down. The reason for this is very simple: the municipalities have no profit motive in providing this service, and so they are able to provide it more cheaply than the private enterprises that previously provided that service. Now a hard-core market radical would probably argue that this was because there was previously no competition between different service providers. That may be true, but if there had been competition, those private enterprises would still have been in it for a profit and so like more expensive for the citizens. On top of that, it would have required multiple redundant collection vehicles to do their rounds regularly - quite an obvious case of inefficiency, if you look at it from a social perspective.

So the truth is that the world is not as simple as the fantasies of the Austrians. Market-based solutions are usually efficient when it comes to production and services where competition is a natural state of affairs in some sense, such as in most areas of manufacturing. For many spheres of public life, in particular when it comes to the provision of infrastructure (transportation, electricity, water, etc.), this is not the case, and therefore state-run provision of those services is usually more efficient.

At any rate, I am of the opinion that government spending is by nature inefficient. See calculation problem.

I'm tempted to simply say Your Opinion Is Wrong or, to be more precise, Your Opinion Contradicts Reality.
[/quote]

The fact that UPS exists should contradict this statement.

[quote name='Fl4sh' timestamp='1297801947' post='4774622']
[quote name='Chris Reynolds' timestamp='1297796354' post='4774576']

[color="#CCCCCC"]He is black, democrat and has Arab names. Who cares what he says or what he does for his nation?

Absolutely hilarious you still think that that's why people don't like him.
[/quote]


What other reason is there? He's one of the best presidents we've ever had as far as getting things done.

I've never heard a reason better than "He's a mauslem" or "He's an Arab". Even if he was...so WHAT?
[/quote]
He also has a habit of blowing huge amounts of money to get out of a recession. So, who is going to pay for that? Someone will have to pay. You can't spend money that isn't yours and not have consequences. He also has a different position than I do on a few issues.

He has done a reasonably decent job, though. He just seems a little trigger happy with the money gun.

[/quote]

If China (or whateever other country) is in the hole several trillion dollars because of us, who's problem is it really? Ours or theirs?

People who argue over politics like this are the same people that make it impossible for or leaders to actually get stuff done. If they didn't have to worry about pleasing everyone and making sure America doesn't hate them for they're actions they would get alot more done.

but seriously, let Clinton puppeteer his wife as president and send bush to prison let alone anyone that voted for him. This country gets way to caught up in the affairs of other people. If the Iraqis really hated Saddam they should've done something about it. He wasn't affecting us, we should never have stepped in.

oh and on a side note, I'm pretty sure Obama wasn't inside me or my family... the topic is misleading ;P j/k