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The question is, does that $7 trillion generate real good and services? More or less than the private sector would have generated?

katzinsky 2y ago
From what I've seen not only are they taking it from otherwise productive components of the economy they tend to produce and encourage economic actors that are a net loss themselves. We'd probably see much higher GDP (after a short period of readjustment) if the spending was stopped cold turkey.
phkahler 2y ago
>> The question is, does that $7 trillion generate real good and services? More or less than the private sector would have generated? That's the wrong question too. It needs to generate enough economic activity such that the TAX on that activity allows repayment of the $7 trillion. AFAICT it does not. If it did we would have a declining debt, but it's going the other direction so that's the answer.
- jjk166 2y ago
  That's the wrong question too. The government is not a for-profit enterprise, most of its activities are meant to be services that can not be (or should not be) profitably provided by the private sector. The military and benefits like Medicare and social security all fall into this category. The government needs to, over the long term, raise taxes to the point where it can cover these expenditures. However there is an economic benefit to keeping taxes low. The right question is do the short term benefits of low taxes justify the long term costs of higher debt. Further, where the government does make actual investments, those investments tend to be long term. A bridge that will stand for 100 years doesn't need to pay for itself in 10. It is entirely possible to spend money faster than you make it on profitable investments.
- throw0101d 2y ago
  > It needs to generate enough economic activity such that the TAX on that activity allows repayment of the $7 trillion. AFAICT it does not. And? Very few countries have actually had surpluses, especially for extended periods of time, and so have not ever been able to pay down their debt. The little while ago the UK refinanced debt from the South Sea Bubble (1700s), Napoleonic Wars (early 1800s), World War 1 (early 1900s): * https://www.theguardian.com/money/2014/dec/03/treasury-repay-war-debts-bonds-uk https://www.theguardian.com/money/2014/dec/03/treasury-repay... Both the total debt and interest being paid on hit at times rose to very high levels: * https://en.wikipedia.org/wiki/United_Kingdom_national_debt https://en.wikipedia.org/wiki/United_Kingdom_national_debt Carrying this debt for centuries has hardly been a problem.
WalterBright 2y ago
A figure I saw years ago was that a government created job cost 3 times what a private sector job would. I.e. government jobs spending just makes things worse.
- edmundsauto 2y ago
  It would depend on the details, but i suspect government jobs have a higher average salary, better benefits, and more security. So we’d probably expect it to cost more to create better jobs. Do you remember where you saw it? a quick google didn’t get me anywhere.
  - WalterBright 2y ago
    It was around 30 years ago. Sorry. It was the kind of thing that sticks in one's mind, though.

katzinsky 2y ago

From what I've seen not only are they taking it from otherwise productive components of the economy they tend to produce and encourage economic actors that are a net loss themselves. We'd probably see much higher GDP (after a short period of readjustment) if the spending was stopped cold turkey.

phkahler 2y ago

>> The question is, does that $7 trillion generate real good and services? More or less than the private sector would have generated? That's the wrong question too. It needs to generate enough economic activity such that the TAX on that activity allows repayment of the $7 trillion. AFAICT it does not. If it did we would have a declining debt, but it's going the other direction so that's the answer.

jjk166 2y ago
That's the wrong question too. The government is not a for-profit enterprise, most of its activities are meant to be services that can not be (or should not be) profitably provided by the private sector. The military and benefits like Medicare and social security all fall into this category. The government needs to, over the long term, raise taxes to the point where it can cover these expenditures. However there is an economic benefit to keeping taxes low. The right question is do the short term benefits of low taxes justify the long term costs of higher debt. Further, where the government does make actual investments, those investments tend to be long term. A bridge that will stand for 100 years doesn't need to pay for itself in 10. It is entirely possible to spend money faster than you make it on profitable investments.
throw0101d 2y ago
> It needs to generate enough economic activity such that the TAX on that activity allows repayment of the $7 trillion. AFAICT it does not. And? Very few countries have actually had surpluses, especially for extended periods of time, and so have not ever been able to pay down their debt. The little while ago the UK refinanced debt from the South Sea Bubble (1700s), Napoleonic Wars (early 1800s), World War 1 (early 1900s): * https://www.theguardian.com/money/2014/dec/03/treasury-repay-war-debts-bonds-uk https://www.theguardian.com/money/2014/dec/03/treasury-repay... Both the total debt and interest being paid on hit at times rose to very high levels: * https://en.wikipedia.org/wiki/United_Kingdom_national_debt https://en.wikipedia.org/wiki/United_Kingdom_national_debt Carrying this debt for centuries has hardly been a problem.

WalterBright 2y ago

A figure I saw years ago was that a government created job cost 3 times what a private sector job would. I.e. government jobs spending just makes things worse.

edmundsauto 2y ago
It would depend on the details, but i suspect government jobs have a higher average salary, better benefits, and more security. So we’d probably expect it to cost more to create better jobs. Do you remember where you saw it? a quick google didn’t get me anywhere.
- WalterBright 2y ago
  It was around 30 years ago. Sorry. It was the kind of thing that sticks in one's mind, though.