Greece's Solution - A Warning to the US

[CycloWizard]

United States - Labor force - by occupation:

farming, forestry, and fishing: 0.7%
manufacturing, extraction, transportation, and crafts: 20.3%
managerial, professional, and technical: 37.3%
sales and office: 24.2%
other services: 17.6%
note: figures exclude the unemployed (2009)

Greece - Labor force - by occupation:

agriculture: 12.4%
industry: 22.4%
services: 65.1% (2005 est.)

Not, even, close.

Greece - Imports - partners:

Germany 13.73%, Italy 12.71%, China 7.08%, France 6.1%, Netherlands 6.02%, South Korea 5.68%, Belgium 4.34%, Spain 4.08% (2009)

United States - Imports - partners:

China 19.3%, Canada 14.24%, Mexico 11.12%, Japan 6.14%, Germany 4.53% (2009)

Source: CIA world factbook. You are also comparing the ~140th economy in the world with #2.

So you listed some differences and I listed some similarities, but only yours count? Gotcha.

 

[CycloWizard]

I'll also take this opportunity to point out the stupidity of arguing for supply- or demand-side economics. Maybe economists need to take some optimization classes to learn that the optimal of two intersecting functionals depends on the form of both functionals, not just one or the other. Or perhaps the problem is that it's easier for the simple minded to take an all-or-nothing approach to every problem rather than consider the possibility that a little bit of each will give better results. Either way, this either/or BS needs to stop being used as a strawman.

 

[yllus]

I saw another U.S. - Greece comparison today that might be noteworthy reading for you folks.

Harvard Business Review: Does the US Really Need More Consumption?

It turns out the United States has a sweet tooth for consumption. In the US, private consumption spending is 70% of GDP. "Old Europe" countries France and Germany come in at 57%. Brazil's is 61%, India's 65%. And China? 35%. Only Greece, at 71%, is in the US's league.

Look at those figures and you see why the US and others have been urging China to raise its consumption, so that its imports will more nearly equal its exports. Well and good. But if you were making policy for China, what level would you aim for? Would you advocate for consumption at the level of Greece and the US? Sweden, at 47%? The world average: 61%?

And then we might ask: what's a good target for the US? Should we remain the leader in instant gratification? It helps to look at the alternative — increasing the share of GDP devoted to investment. In the US, we invest 15.4% of GDP. China is at an astonishing 42.3%. Even Greece is at 22.6%. France and Germany, 22% and 18%, respectively.

If you happen to have driven in both Manhattan and Munich recently, you will surely know that the US transport infrastructure could do with a little investment. Or, if you've tried to compete with China or Vietnam (investing 41.6%) or even Bangladesh (24%), you might find some tax relief to fund investment very welcome. Most fundamentally: if the US expects to compete with the rapidly modernizing countries around the world, the proportion of GDP devoted to investment must rise, at the expense of consumption. After decades of steady growth in consumption, some lentil soup for the economy is in order.

 

[Moonbeam]

Scientific consensus is an oxymoron. In science, something is either right or it's not. The number of scientists who believe x=y has no bearing on whether or not it is actually true that x=y. And I don't support "supply-side" economics - that's just your strawman.

Scientific consensus is universal when x=y has proven testable. It becomes an issue when theory is still up in the air.

I am glad you don't support supply-side economics. It was my mistake and an unwarranted assumption that you did.

 

[CycloWizard]

Scientific consensus is universal when x=y has proven testable. It becomes an issue when theory is still up in the air.

Consensus has no business in a conversation about science. Something is either true or it isn't. Having a larger group agree that something is true has no bearing on whether or not it is actually true.

 

[CycloWizard]

Cuba will now lay off 20% (1 million) of its public employees and allow more private hiring over the next year. The reason?

"Our state cannot and should not continue maintaining companies, productive entities and services with inflated payrolls and losses that damage our economy and result counterproductive, create bad habits and distort workers' conduct," the CTC, Cuba's official labor union, said in newspapers.

Castro had announced layoffs in August, but said they would occur over the next five years.
At the time, he said the government "agreed to broaden the exercise of self employment and its use as another alternative for the employment of those excess workers."

The drastic and unprecedented economic changes have many Cubans worried that jobs they had long taken for granted under the Communist government will no longer be guaranteed.

Others are hopeful that they will have more freedom to set prices and earn more than the average state wage of $20 a month.

Source

 

[Moonbeam]

Consensus has no business in a conversation about science. Something is either true or it isn't. Having a larger group agree that something is true has no bearing on whether or not it is actually true.

Consensus is what lay people look for when making decisions regarding competing and different theories. They don't have the luxury of knowing the final truth. In America the majority of economists went with the notion the economy needed stimulus and that is what was done, had to be done, and could have only rationally been done. Responsible folk who are not expert themselves, are going to go with the bright knowledgeable majority. It doesn't make that the right decision, but it makes it the only logical one for folk who have the responsibility act.

Let's not get off the deep end here. Economics isn't like the theory of gravity.

 

[CycloWizard]

Consensus is what lay people look for when making decisions regarding competing and different theories. They don't have the luxury of knowing the final truth. In America the majority of economists went with the notion the economy needed stimulus and that is what was done, had to be done, and could have only rationally been done. Responsible folk who are not expert themselves, are going to go with the bright knowledgeable majority. It doesn't make that the right decision, but it makes it the only logical one for folk who have the responsibility act.

Let's not get off the deep end here. Economics isn't like the theory of gravity.

I didn't realize that stimulus (what you are apparently talking about) and big government (what I am talking about, per the OP) were necessarily one and the same. What exactly were you smoking yesterday?

 

[ConstipatedVigilante]

Moonbeam, have you gone batshit insane? You make it sound like you don't believe that inflation exists.

 

[Moonbeam]

I didn't realize that stimulus (what you are apparently talking about) and big government (what I am talking about, per the OP) were necessarily one and the same. What exactly were you smoking yesterday?

Ecstasy, no not that. I remember, Amused.

 

[LegendKiller]

Comparing Greece to the US is moronic. Completely different economies and the supposed large government spending isn't that big of a deal. Calculatedrisk already showed that the myth of massive government spending is that, a myth.

 

[KMFJD]

Here's a great piece on the problems they face

http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?currentPage=all

FTA: "The first thing a government does in an election year is to pull the tax collectors off the streets."

The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn’t the law—there was a law on the books that made it a jailable offense to cheat the government out of more than 150,000 euros—but its enforcement. “If the law was enforced,” the tax collector said, “every doctor in Greece would be in jail.”

 

[Moonbeam]

Moonbeam, have you gone batshit insane? You make it sound like you don't believe that inflation exists.

I haven't seen any. If you print enough money, you realize, I hope, it will be used for TP. But if you economy can and does makes a hundred billion rolls a day worth a dollar each and nothing else, and nobody has any money to buy any, you can print tons of sand paper redeemable for a roll and get the economy moving again. If supply and demand are in balance and everybody has a job stimulus will work if the bottom falls out with demand. Fear is the contraction of all feeling, a spiritual death. Dead people don't like to spend. money is happiness for the spiritual dead. This is all Moonbeam knows about this, sort of.

The economy looks to me like a state of mind. Self hating folk always think of themselves first and above others. They get mean and self destructive when threatened by awareness of their psychosis. Money is a substitute for real self respect.

 

[Moonbeam]

Here's a great piece on the problems they face

http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?currentPage=all

FTA: "The first thing a government does in an election year is to pull the tax collectors off the streets."

The scale of Greek tax cheating was at least as incredible as its scope: an estimated two-thirds of Greek doctors reported incomes under 12,000 euros a year—which meant, because incomes below that amount weren’t taxable, that even plastic surgeons making millions a year paid no tax at all. The problem wasn’t the law—there was a law on the books that made it a jailable offense to cheat the government out of more than 150,000 euros—but its enforcement. “If the law was enforced,” the tax collector said, “every doctor in Greece would be in jail.”

Yup, lots of CWs there who think their money belongs to them, like social structure don't create the environment in which they can earn without the law of the jungle ripping away their bananas.

 

[CycloWizard]

Yup, lots of CWs there who think their money belongs to them, like social structure don't create the environment in which they can earn without the law of the jungle ripping away their bananas.

Ah, the old myth that usually gets tossed out in this situation prior to all of the your-money-is-my-money liberals beating a hasty retreat when I ask the obvious questions about the validity of such a claim. Since there are already at least three threads in which you've made this claim then disappeared when I asked questions, I'll simply await your reply in one of them.

 

[LunarRay]

That's probably a good thing. Regardless, it's irrelevant. While the US can print it's own currency, there's still a limit it can print without causing a lot of inflation. Inflating your way out of debt isn't a trick up a sleeve, it's a solution of last resort, an act of desperation, and has many negative consequences.

IF one were to opine that - "all other things being equal" - 'printing money' beyond the needs of the economic activity ought or will cause inflation it might be a true statement. However, in the real world view... Applied vs Theoretical Economic research... one might include in their analysis the effect of the money printing (I presume y'all mean spending by the government or stimulus) on the increase in economic activity which would/should necessitate a greater volume of 'money' bouncing about to enable the very growth the spending creates.

The DSE actions of ... I guess, seventy or eighty years has shown that prudent use of that vehicle to tickle and then stimulate growth IS the way to go...
Never forget that the first difference twixt DSE and SSE are the needs of the population... the real needs that government must consider and which the folks on the right who generally support SSE seem oblivious to.

 

[LunarRay]

Demand side OR supply side doesn't fucking matter, Moonfuck.

The simple fact is this: Value is created by rarity. The more there is of ANYTHING, including money, the less it's fucking worth. Print enough money and people will start using it for toilet paper.

That term 'Printing Money' is simply another term for Government spending in my way of reading this issue as posters comment... So, in order to make sense of what is being posted we need being in the same frame of thinking...
The Government don't regulate the money volume to any great extent but they can and do via policy but in the long term usually... theirs is fiscal policy... the FED does the hard bit...

Ergo, the issue comes down to 'Stimulus'! Does government stimulate via the DSE theory or the SSE... one HAS to occur in this climate.
I prefer DSE as I said before cuz it does deal with the needs of the population that have legitimate need to survive... and today... not via what may trickle down in five years, if ever, via SSE...

 

[LunarRay]

http://en.wikipedia.org/wiki/Hyperinflation

Moonie, read and learn.

History is FULL of examples of governments simply printing money to pay debts, and thus causing rapid and even hyper inflation.



So stop insulting everyone, okay? Just fucking admit you're wrong and move on.

Good Grief! ... Money don't just get printed willy nilly...
IF you're speaking to international activity... the Dollar is the Reserve Currency... At the moment.

IF you're speaking to the stimulus government must provide to a sick 'internal' economy the notion is which way.. DSE or SSE.. to do nothing is insane economics ('leave it be' causes deflation as I see it).... So which do you prefer? I suggest DSE has much more velocity in the near term and even (debatable) in the long term... along with the real needs of citizens which is a function of the government as I see it...

 

[LunarRay]

The problem is that you confuse knowledge with arrogance because you know nothing. Since you know nothing, you assume the rest of us are in the same boat. Sorry to disappoint you. Your article, which utilizes an appeal to popularity as its very foundation, is nothing more than a fallacy-based puff piece.

There are two schools of Economic understanding and both seek to arrive at the same conclusion... IF you look at a more 'applied' reality you simply look at what did occur and answer the why. But, probably equally important, you must also answer some theoretical what if's.
DSE stimulus has been the method that has provided the relief the economy needed at the time it needed it... and then a move toward a SSE insures(d) that bandage stays in contact with the wound... Facts are facts, it seems to me... the only question is the 'what if' bit. You can't really argue it, however, because it (SSE) did not occur during really stagnant economic conditions or depression... DSE were employed and employed with success and SSE, it seems, were considered but not employed or if they were like during Regan the result was not compelling, IMO.

 

[Moonbeam]

Ah, the old myth that usually gets tossed out in this situation prior to all of the your-money-is-my-money liberals beating a hasty retreat when I ask the obvious questions about the validity of such a claim. Since there are already at least three threads in which you've made this claim then disappeared when I asked questions, I'll simply await your reply in one of them.

You will wait forever. I don't know what your questions are or what you are talking about. There is a last time I look at every thread. And what an absurd notion. Listen to your self. All your money is my money. hahahahahaha You are poor compared to me. I don't need the money I have because there's nothing I want for. On a clear night I own billions of stars, may I give you the moon?

 

[Acanthus]

Ah, the old myth that usually gets tossed out in this situation prior to all of the your-money-is-my-money liberals beating a hasty retreat when I ask the obvious questions about the validity of such a claim. Since there are already at least three threads in which you've made this claim then disappeared when I asked questions, I'll simply await your reply in one of them.

The military protects you from foreign invaders taking your wealth.
The police force protects you from domestic invaders taking your wealth.
The roads, power, water, and other infrastructure that make us a 1st world nation allow you to facilitate wealth more easily.
Financial regulation stabilizes markets and protects you from bring swindled out of your wealth.
The dept. of agriculture analyzes food and arable land for safety.
The central intelligence agency keeps our foreign enemies in check and keeps us aware of their activities.
The FBI takes care of high profile criminals and investigations in the united states and abroad.
The court system employs intellectual property laws to facilitate wealth through innovation.
Free trade allows the rich global labor arbitrage that increased the wealth disparity measuring gini index to record levels never seen before in the united states.
The department of education keeps you and your peers out of the stone age.
The department of energy keeps energy production safe and facilitates safer and cleaner energy goals.
The department of health and human services quells the crime and unrest of the less fortunate when they fall on harder times by providing a basic level of care.
The BLS provides non partisan statistical analysis of economic trends on all metrics of the US economy and abroad.
The department of transportation manages the maintenance and safety of roads and rail.
The environmental protection agency maintains a pollution standard for the public health.
The FCC manages our radio spectrum.
The FDIC insures our basic banking system.
The SEC regulates financial markets to maintain order and reduce volitility.
The SBA take calculated risks in new small business startups to give even the littlest guy a chance of success with a good idea.
The fire department stops your home from burning down.
Subsidized insurance stops you from losing everything to a natural disaster in a high risk area.

I can keep going, but you probably wont ever, ever realize how incredibly wrong you are when you say you don't personally benefit from the system in place.

 

[Darwin333]

That's probably a good thing. Regardless, it's irrelevant. While the US can print it's own currency, there's still a limit it can print without causing a lot of inflation. Inflating your way out of debt isn't a trick up a sleeve, it's a solution of last resort, an act of desperation, and has many negative consequences.

3 words make inflating our debt away impossible, "indexed to inflation". Our largest yearly expenditures are indexed to inflation so you actually make our problem much worse by trying to inflate away the debt and I am talking about immediately worse not worse at some future date.

 

[Darwin333]

I get so tired of the same regurgitated BS.


http://calculatedriskimages.blogspot.com/2010/09/government-spending-as-percent-of-gdp.html

http://calculatedriskimages.blogspot.com/2010/09/government-employment-ex-education.html

The vast majority of the current deficit was driven not by government employment, but by wars, tax cuts, and bailouts.

Of course you also realize that our debt has been growing exponentially faster than GDP and revenue (all as a percentage of GDP) for well over half a century.

I expect you of all people to remember your middle school math class on exponents. So, please explain what eventually happens with exponential growth over a long period of time. You don't even have to include the very large spikes if you don't want too.

 

[bamacre]

IF one were to opine that - "all other things being equal" - 'printing money' beyond the needs of the economic activity ought or will cause inflation it might be a true statement. However, in the real world view... Applied vs Theoretical Economic research... one might include in their analysis the effect of the money printing (I presume y'all mean spending by the government or stimulus) on the increase in economic activity which would/should necessitate a greater volume of 'money' bouncing about to enable the very growth the spending creates.

The DSE actions of ... I guess, seventy or eighty years has shown that prudent use of that vehicle to tickle and then stimulate growth IS the way to go...
Never forget that the first difference twixt DSE and SSE are the needs of the population... the real needs that government must consider and which the folks on the right who generally support SSE seem oblivious to.

Greenspan ran the printing presses 24/7. Did we see inflation? Did prices go up? No. Unless you wanted a house. Or gas for your car. Or health care. Or a college education. We can have inflation without McOwen Milk hitting $5 a gallon. It's the malinvestment that hurts, whether it be tech stocks or housing. Either way the rich get richer, then the bubble bursts, and the poor get poorer. They're the ones that then lose their jobs.

 

[CycloWizard]

The military protects you from foreign invaders taking your wealth.
The police force protects you from domestic invaders taking your wealth.
The roads, power, water, and other infrastructure that make us a 1st world nation allow you to facilitate wealth more easily.
Financial regulation stabilizes markets and protects you from bring swindled out of your wealth.
The dept. of agriculture analyzes food and arable land for safety.
The central intelligence agency keeps our foreign enemies in check and keeps us aware of their activities.
The FBI takes care of high profile criminals and investigations in the united states and abroad.
The court system employs intellectual property laws to facilitate wealth through innovation.
Free trade allows the rich global labor arbitrage that increased the wealth disparity measuring gini index to record levels never seen before in the united states.
The department of education keeps you and your peers out of the stone age.
The department of energy keeps energy production safe and facilitates safer and cleaner energy goals.
The department of health and human services quells the crime and unrest of the less fortunate when they fall on harder times by providing a basic level of care.
The BLS provides non partisan statistical analysis of economic trends on all metrics of the US economy and abroad.
The department of transportation manages the maintenance and safety of roads and rail.
The environmental protection agency maintains a pollution standard for the public health.
The FCC manages our radio spectrum.
The FDIC insures our basic banking system.
The SEC regulates financial markets to maintain order and reduce volitility.
The SBA take calculated risks in new small business startups to give even the littlest guy a chance of success with a good idea.
The fire department stops your home from burning down.
Subsidized insurance stops you from losing everything to a natural disaster in a high risk area.

I can keep going, but you probably wont ever, ever realize how incredibly wrong you are when you say you don't personally benefit from the system in place.

No one ever said anything resembling your claim - that I don't benefit from infrastructure and such (though I'm fairly certain half the things you listed could easily go on a list of things which could easily be done without). That's a terrible strawman. The question, as always, is: why do I owe everything I earn to government for providing products or services? If I pay a private movie theater the price of admission, they can't come back later and levy a tax on all of my future income because the film enriched my life - I paid the agreed-upon price for the product/service rendered and that's that. But for some reason, simply paying my taxes and using the products and services which they nominally pay for doesn't seem to be sufficient for Moonbeam and others. They think any money I make forevermore belongs to society (read: government), though they have never been able to explain why. Indeed, there are several threads in which a post similar to this one is the last post in the thread because said claimants magically disappeared once I asked this question.