I'd rather have an economy where healthcare, housing, and education are so affordable that anyone with a high school diploma or better that is willing to work can afford to cover a family of 4 with money left over for entertainment and savings.
We know this is possible, because the USA used to have it in living memory.
Factually untrue: post-war housing was massively subsidized by the US government directly through FHA/GI Bill to buyers and significant infrastructure spending (US highway system, water/sanitation, etc).
The US social contract was largely predicated on the idea that subsidizing citizens to obtain housing would lead them to be stable and productive workers/consumers and avoid communist tendencies.
Of course, communism is not now a threat and we are likewise not seeing such public investment in any common vision for a renewed social contract.
No doubt the mostly defense spending you describe provided fiscal stimulus to the economy and led to the benefits you list, but that's not the same as a subsidy, which would mean something like Section 8 vouchers.
The real driving force was that wage growth massively outpaced costs. After the war ended it was routine to pay off a 15 year mortgage a decade early, because real wages rose so much. Similarly, our current lousy situation is the result of median real wages staying flat for decades.
To be fair, that was in the post war economy. The U.S. had a massive competitive advantage in having a not-bombed infrastructure. Young workers had a competitive advantage in not having to compete with people who died in the war.
And there was a baby boom and a more economically engaged female population, creating new kinds of demands and opportunities for productivity.
Well, Germany had the advantage of having to build a 100% new infrastructure and that helped a lot to overtake those European countries that were on the winning side.
I don't know when it ended in the US but this was doable into the 80's and possibly 90's in Australia (outside of Sydney), even if it was well on track to become not so doable. House prices becoming investment vehicles was the single biggest blow to this. It started getting out of control when the WW2 dead would have been retiring.
the war didn't cause that, us exports in the post war years didn't experience a wild surge. it was the progressive tax rates, 90% on income in excess of 400k/yr that forced investment into societal infrastructure, education and research and development in a way we haven't seen in the last 30 years.
> We know this is possible, because the USA used to have it in living memory.
If you look back at your history, you'll see that this only applied to the already wealthy part of the US for the most part, and for the most part the white people only.
> If you look back at your history, you'll see that this only applied to the already wealthy part of the US for the most part
This happy state of affairs was during the adulthood of the generation that grew up during the depression. The vast majority of the US population was poor, including those living in the cities.
> for the most part the white people only.
The USA was something like 95% white at the time, so how is this a helpful contribution to the conversation?
I'm not a US citizen. Merely the reason why I wouldn't move to the US. Low taxes don't attract me, stable government and good public services do. I guess just a different point of view :)
The... somewhat jab at the end was directed towards those in the US constantly complaining about how "such and such country does it better." My reply has become: so move there! Virtually every country in the world accepts immigrants who are willing to contribute. If someone believes another country is far preferable based on their policies, I believe they should vote with their citizenship and move there.
I suspect you're being downvoted for the blutness of your jab, but I understand the sentiment :)
I've moved once and I'm preparing at some point to do it again. But sadly not everyone can afford that, and that's the same people who stay awake at night worrying about their healthcare costs.
But my family all lives in the US, not in some other country. Knowing that, I will work to make this system better instead of bailing on the people I love. Don't take it personally when someone criticizes their government, that's what democracy is all about.
I think the same goes to you. The US goverent is built such that it's function can change over time. If you want something fixed, you should move to a country where citizens don't get a say in policy
Healthcare would be cheaper as a percentage of GDP of it was single payer. If you put healthcare as part of the gov't GPD graph, the USA would be higher than places like Canada.
South Korea also has single payer and has equal gov't GDP consumption as the USA.
Government spending, not taxes, are the proper measure of the burden of government. Ultimately, the debts will have to be paid whether that be outright, through devaluation of the currency, or a combination of both.
No they don't. A monetarily sovereign government with a productive economy, such as the USA, can roll over its debt indefinitely. In fact, the global financial system relies on US debt. Foreign countries call it "reserves."
Also, remember that the size of the public sector's balance sheet isn't what controls inflation, it's too much money chasing too few goods and services. Most money isn't even created by the government, it's created by banks with keystrokes.
> A monetarily sovereign government with a productive economy
There's a reason we have a massive trade imbalance - our number one export is debt.
> Also, remember that the size of the public sector's balance sheet isn't what controls inflation, it's too much money chasing too few goods and services.
I forget the percentage, but a meaningful amount of US treasuries have maturities of 2 years or less. The only thing that controls inflation is the willingness (foolhardiness?) of countries or people willing to buy our debt at very low interest rates. If that ever changes, we are in for a very rude awakening.
Foreign countries have to buy our debt, because they want to run a current account surplus against us. The alternative is to just sit on the reserves they accumulate from that surplus, which pay no interest. Given the choice of 0% or 2% every sovereign is going to choose the latter.
China isn't the USA's bank. The Federal Reserve is the USA's bank. China is just another depositor at the Fed. The Federal Reserve sets USD interest rates, not China or any other foreign sovereign.
> The Federal Reserve sets USD interest rates, not China or any other foreign sovereign.
If the time ever comes where there's no market for our debt at 2%, we'll see who's actually in the driver's seat. No China itself is not, but the market generally is.
As long as the Fed lets banks materialize money out of thin air for 2% to loan out to someone else, there will be someone willing to loan the US money for 2%+ε. The deciding factor is not whether or not the US can borrow money, it's whether you can buy anything outside of the country with that money.
If that time ever comes, it will be because of a collapse in the US economy to such an extent that foreigners no longer want to hold claims against it. At that point it doesn’t matter what nominal interest rates are, because it simply won’t matter.
Many get the causality backwards, thinking that inflation causes economic collapse, but the former is actually the consequence of the latter.
This idea that debts don't need to paid because they can be rolled over is pretty absurd.
It's true that aggregate debt never need go to zero, but all debt has a carrying cost. Current debt expense is $310BN annually for the federal government [1], and likely going higher. A high amount of debt is very dangerous because the carrying costs could easily rise for reasons beyond our control. In fact carry costs were 4.7% merely ten years ago, vs 2.7% today. If high interest rates return, high debt countries are definitely facing a budget squeeze.
Interest on federal debt owned by the US private sector is fiscal stimulus, because it is net expansive for private balance sheets. Likewise, when the federal reserve holds treasuries and remits the interest back to the treasury it’s draining reserves from the economy.
While out of control high interest rates have serious drawbacks, there are definitely solid arguments that rewarding savers with a higher safe return than the current 0.5-2% available now will benefit the people.
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.
This 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.
Or those who require zero government services. Your implication is that lowering taxes would have no impact on the services people receive. Does that seem right?
I don't think there are people who require zero government services. no matter what, you'll be benefitting from something -- at the very least, that no other army will invade
I find it interesting that Ireland is the lowest taxed country yet they have bet the farm on providing a haven for companies to avoid paying taxes back home. It’s a gamble they’ve made which seems to paying off but I’ve heard that if other countries closed this loophole they it would absolutely devestate the Irish economy.
I know it feels a little unfair to people of higher tax countries who feel like they deserve certain services from their government and (at least the majority) are willing to pay for those services through their taxes. But another cost of these government services that they need to be aware of is that it makes it more difficult to attract large multi-national employers to the country. Large companies can choose which country they are taxed in just like you and I can choose which market we shop at. If your preferred market decides to raise prices while another decides to lower them, this would not be considered a loophole. It would be considered business savvy or competition.
==Large companies can choose which country they are taxed in just like you and I can choose which market we shop at. If your preferred market decides to raise prices while another decides to lower them, this would not be considered a loophole. It would be considered business savvy or competition.==
To complete your market analogy, can you explain what "services" the country provides the company?
When I compare my tax burden in one country vs. what I would be paying had I been living in another country, I would not use the measure of "Tax revenue as share of GDP". This is the first time I came across such a way of defining the total tax percentage.
Is this include corporate income tax, capital gains tax, personal income tax, social-security payments rolled into one? If so, then it makes sense, as the US has low corporate and cap gains taxes.
Earlier today, I made a little scatter plot comparing the tax burden (tax revenue to GDP ratio) of a bunch of countries against their UN World Happiness Index. This is the result:
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[ 4.7 ms ] story [ 115 ms ] threadWe know this is possible, because the USA used to have it in living memory.
The US social contract was largely predicated on the idea that subsidizing citizens to obtain housing would lead them to be stable and productive workers/consumers and avoid communist tendencies.
Of course, communism is not now a threat and we are likewise not seeing such public investment in any common vision for a renewed social contract.
The real driving force was that wage growth massively outpaced costs. After the war ended it was routine to pay off a 15 year mortgage a decade early, because real wages rose so much. Similarly, our current lousy situation is the result of median real wages staying flat for decades.
And there was a baby boom and a more economically engaged female population, creating new kinds of demands and opportunities for productivity.
If you look back at your history, you'll see that this only applied to the already wealthy part of the US for the most part, and for the most part the white people only.
This happy state of affairs was during the adulthood of the generation that grew up during the depression. The vast majority of the US population was poor, including those living in the cities.
> for the most part the white people only.
The USA was something like 95% white at the time, so how is this a helpful contribution to the conversation?
Is it really so hard to do simple research? In 1945 African-Americans were 10% of the population vs the current 12.6%.
-> Make premiums deductible for people, not companies, severing the tie to employment.
-> Require service providers to post prices so people know what the hell things cost.
-> Allow sales across state lines to increase competition.
-> Educate the public on what insurance is for (unexpected costs they can't afford). Your auto insurance doesn't cover oil changes.
The problem isn't lack of government - the problem is government.
Government provides services very poorly. And if you'd rather they did provide health care? Immigrate somewhere where they do.
The... somewhat jab at the end was directed towards those in the US constantly complaining about how "such and such country does it better." My reply has become: so move there! Virtually every country in the world accepts immigrants who are willing to contribute. If someone believes another country is far preferable based on their policies, I believe they should vote with their citizenship and move there.
I've moved once and I'm preparing at some point to do it again. But sadly not everyone can afford that, and that's the same people who stay awake at night worrying about their healthcare costs.
South Korea also has single payer and has equal gov't GDP consumption as the USA.
Also, remember that the size of the public sector's balance sheet isn't what controls inflation, it's too much money chasing too few goods and services. Most money isn't even created by the government, it's created by banks with keystrokes.
There's a reason we have a massive trade imbalance - our number one export is debt.
> Also, remember that the size of the public sector's balance sheet isn't what controls inflation, it's too much money chasing too few goods and services.
I forget the percentage, but a meaningful amount of US treasuries have maturities of 2 years or less. The only thing that controls inflation is the willingness (foolhardiness?) of countries or people willing to buy our debt at very low interest rates. If that ever changes, we are in for a very rude awakening.
China isn't the USA's bank. The Federal Reserve is the USA's bank. China is just another depositor at the Fed. The Federal Reserve sets USD interest rates, not China or any other foreign sovereign.
If the time ever comes where there's no market for our debt at 2%, we'll see who's actually in the driver's seat. No China itself is not, but the market generally is.
Many get the causality backwards, thinking that inflation causes economic collapse, but the former is actually the consequence of the latter.
It's true that aggregate debt never need go to zero, but all debt has a carrying cost. Current debt expense is $310BN annually for the federal government [1], and likely going higher. A high amount of debt is very dangerous because the carrying costs could easily rise for reasons beyond our control. In fact carry costs were 4.7% merely ten years ago, vs 2.7% today. If high interest rates return, high debt countries are definitely facing a budget squeeze.
[1] https://www.thebalance.com/interest-on-the-national-debt-411...
While out of control high interest rates have serious drawbacks, there are definitely solid arguments that rewarding savers with a higher safe return than the current 0.5-2% available now will benefit the people.
That and our hilariously large military.
Due to treaties, the US protects one quarter of the world -https://www.washingtonpost.com/news/worldviews/wp/2015/05/30...
Also, provides defense to the world's oceans.
And employs millions as a massive jobs program - https://www.csmonitor.com/Business/Robert-Reich/2010/0813/Am...
Will China invade Taiwan? North Korea invade the South? Russia invade Ukraine?
Who will take up the burden the US bears?
- most of the countries are in the band of 25% to 30% and its just happens US is a the lower one in that band, so there is no "daylight" per se.
- Greece is around 38-39% and is notorious for tax evasion.
The graph demonstrates American is low, but not completely out of whack.. now France.. well they are French!
To complete your market analogy, can you explain what "services" the country provides the company?
Is this include corporate income tax, capital gains tax, personal income tax, social-security payments rolled into one? If so, then it makes sense, as the US has low corporate and cap gains taxes.
https://snabeltann.no/system/media_attachments/files/000/429...