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The US has tried massively increasing how much "free money" it gives people. http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-driving-growth-in-gove
by aminok 10y ago
The US has tried massively increasing how much "free money" it gives people.
http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-driving-growth-in-government-spending/?_r=1 http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-...
Annual inflation-adjusted spending growth on various components of social welfare spending (1972 - 2011):
>Pensions and retirement: 4.4%
>Healthcare: 5.7%
>Welfare: 4.1%
Annual inflation-adjusted economic growth over the time frame:
>2.7%
By every broad-based objective measure, the scale of forcible income redistribution has massively increased in relative and absolute terms. The only thing the US has to show for it is slower productivity growth, lower wage growth, huge trade deficits, and I would argue, an explosion in single parenthood:
http://pinetreewatchdog.org/500-rise-in-single-parenthood-fueling-family-poverty-in-maine/ http://pinetreewatchdog.org/500-rise-in-single-parenthood-fu...
>You tax the companies profits but you use that money to grow the market.
You don't grow the market by giving people more currency to go shop with.
In a market based economy, the guy who buys the product is buying it with something of value that he is producing. Any trade is a two way street. Currency is an abstraction that obfuscates this fact. He might be giving you some units of currency, but really he's giving you whatever good/service he had to provide in order to get his hands on that currency. Without a productive act on his side, the money he's giving has no value to the economy at large. We are not better off just giving people currency to go shop with. The only value is in the actual production of goods/services, which people are incentivized to do when taxes are at their minimum, and they have to earn the currency they receive through trade.
In other words, economic growth is not enhanced by redistributing income from highly productive people to unproductive people to shop with.
The only process that increases the actual level of productivity is investment, which grows the capital stock (factories, gas stations, restaurants, kiosks, car dealerships, malls and IP) and forcible redistribution, by reducing income earned on investments, reduces the incentive to invest.