3 ms·
Think of it as a percentage of the workforce. Whether they tax the money or borrow it, they're still consuming a certain portion of the nation's collective effo
by SamReidHughes 8y ago
Think of it as a percentage of the workforce. Whether they tax the money or borrow it, they're still consuming a certain portion of the nation's collective effort on whatever it pays for. That work could have been spent doing more useful or less useful nongovernmental stuff, or people could retire earlier.
- User23 8y agoThis is the key insight. The equation GDP = C + I + G + (X – M) makes it clear that as G grows relative to the other factors, the private sector has less control over the economy.