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>Are you seriously suggesting that sucking subsidy money out of the productive economy to pay for those jobs is not depressing demand? Which part of giving peo

>Are you seriously suggesting that sucking subsidy money out of the productive economy to pay for those jobs is not depressing demand? Which part of giving people money do you think would reduce their tendency to spend it?

nandemo 11y ago
Presumably, the implication is that the government must first excise taxes from the public, thereby depressing demand. The alternative is to borrow money by issuing bonds, but that's just a way of postponing the problem, eventually the government has to excise more taxes to pay the debt.
simonh 11y ago
Productive companies and organisations generate demand for the things they need in order to be productive. Unproductive ones generate less demand per worker. Yes those workers still need to pay for things, but if they are sitting around at work not doing much their work activity is a waste. Building a bridge to nowhere only creates demand for concrete and steel and goods for the workers. A useful heavily used bridge can generate demand from the economic activity it enables. An efficient factory producing goods generates the same demand as an inefficient one producing the same goods, but the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities.
- crdoconnor 11y ago
  Actually, "efficient" factories that don't face competitive pressures (i.e. that don't drop their prices) will have a lower multiplier. Money spent on wages gets spent and circulated within the economy at a higher rate than money that is diverted towards profits (which tends to bid up the value of fixed assets in a demand constrained environment). >the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities. Well, if you assume that opportunities for "demand producing activities" (i.e. products which will convince the Japanese to stop saving at such a high rate) are plentiful then yes. In the 80s perhaps. But they're not. The Japanese really can't be convinced to spend.
  - simonh 11y ago
    There's no particular reason to assume that a more productive business will be more profitable than a subsidised one. That's a completely separate question. If industry is more efficient, the Japanese people don't need to spend more. The same rate of spending will buy more goods and services, supporting more production by more businesses, generating more demand. You can't get away from the fact that the same amount of money spent on production by a more efficient company generates more demand for the things that company needs in order to produce. Production by capital-consuming activities by its nature generates demand.
    - crdoconnor 11y ago
      >There's no particular reason to assume that a more productive business will be more profitable than a subsidised one. A business that fires half of its workers is likely be more profitable than one that doesn't, assuming it can get by without them. >The same rate of spending will buy more goods and services Wages will typically be spent on goods and services. Profits usually bid up the price of fixed assets (e.g. housing in San Francisco & New York, NASDAQ, bonds). >You can't get away from the fact that the same amount of money spent on production by a more efficient company generates more demand for the things Except that's not what happens.

nandemo 11y ago

Presumably, the implication is that the government must first excise taxes from the public, thereby depressing demand. The alternative is to borrow money by issuing bonds, but that's just a way of postponing the problem, eventually the government has to excise more taxes to pay the debt.

simonh 11y ago

Productive companies and organisations generate demand for the things they need in order to be productive. Unproductive ones generate less demand per worker. Yes those workers still need to pay for things, but if they are sitting around at work not doing much their work activity is a waste. Building a bridge to nowhere only creates demand for concrete and steel and goods for the workers. A useful heavily used bridge can generate demand from the economic activity it enables. An efficient factory producing goods generates the same demand as an inefficient one producing the same goods, but the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities.

crdoconnor 11y ago
Actually, "efficient" factories that don't face competitive pressures (i.e. that don't drop their prices) will have a lower multiplier. Money spent on wages gets spent and circulated within the economy at a higher rate than money that is diverted towards profits (which tends to bid up the value of fixed assets in a demand constrained environment). >the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities. Well, if you assume that opportunities for "demand producing activities" (i.e. products which will convince the Japanese to stop saving at such a high rate) are plentiful then yes. In the 80s perhaps. But they're not. The Japanese really can't be convinced to spend.
- simonh 11y ago
  There's no particular reason to assume that a more productive business will be more profitable than a subsidised one. That's a completely separate question. If industry is more efficient, the Japanese people don't need to spend more. The same rate of spending will buy more goods and services, supporting more production by more businesses, generating more demand. You can't get away from the fact that the same amount of money spent on production by a more efficient company generates more demand for the things that company needs in order to produce. Production by capital-consuming activities by its nature generates demand.
  - crdoconnor 11y ago
    >There's no particular reason to assume that a more productive business will be more profitable than a subsidised one. A business that fires half of its workers is likely be more profitable than one that doesn't, assuming it can get by without them. >The same rate of spending will buy more goods and services Wages will typically be spent on goods and services. Profits usually bid up the price of fixed assets (e.g. housing in San Francisco & New York, NASDAQ, bonds). >You can't get away from the fact that the same amount of money spent on production by a more efficient company generates more demand for the things Except that's not what happens.