During a recession, is it better to increase government spending or decrease taxes? MACROECONOMICS?
Borrowing constraints exist when consumers are unable to borrow as much as they desire, i.e., they are not able to smooth consumption. This is more likely to happen during a recession than an expansion. Suppose the economy is currently in recession. In order to spur economic activity, would you recommend a reduction in taxes or an increase in government expenditures? Any help would be appreciated.
What would happen if the USA got rid of all its welfare services?
Let's see --massive homelessness -- millions of the working poor use their paycheck to cover rent, relying on welfare for food. But hunger wins. Within a few months, landlords would be going broke all over the country.housing prices collapse -- a large percentage of houses and apartments are rented to the working poor. With mass evictions comes landlords unable to cover mortgages. Foreclosures soar and the frail housing market collapses again.with far less tax money going to poor people, let's assume the government uses the cash to pay down debt instead of offering tax rebates. This drops interest rates and frees up capital for business loans. That would be stimulative, but with far fewer consumers, the economy is sliding into massive recession. Business will contract, not expand.the recession will go world wide quickly, just as it did in 2008, but with fragile economies around the world, the damage would be far worse.homelessness drives up crime. Since state income usually is tied to sales tax (way down) and property tax (declining), states will cut programs for everything but police and prisons. The results will be more cops and far more inmates, driving up costs dramatically.restless homeless voters make for an unhappy electorate. Tax cuts, when they do come, only benefit people who pay taxes, so that will not satisfy them. A series of increasingly progressive candidates will arise to power with populist messages.within a few years, the president and congress will face a massive political backlash. They will be voted out of power in an election similar to 1932.This time, instead of New Deal reforms that allowed rich people to keep their possessions, the anger would be so great that waves of socialism would sweep the country. Unions would roar back in offices and factories and workplaces around the country. The likelihood of civil war would loom large.Good luck with that.
Why are conservatives against the US becoming a welfare state? When countries like the Netherlands, Germany, Sweden, and Norway are all welfare states and have a higher inequality-adjusted HDI than the US.
I absolutely abhor welfare,When I first came to America my family was dirt poor and we lived in a heavily welfare dependent community. If the goal of welfare was to limit poverty and help people get on their feet then it absolutely failed. Growing up I regularly encountered Individuals who tried hard to keep their incomes off the books and the justification was always the same:‘If I make more than X, they will stop giving me benefits’Even when they have the potential to become productive members of society, the loss of welfare state benefits if they try to do so is an implicit “tax” on what they would earn that often exceeds the explicit tax on a millionaire. If increasing your income by $10,000 would cause you to lose $15,000 in government benefits, would you do it? In short, the political left’s welfare state makes poverty more comfortable, while penalizing attempts to rise out of poverty.-Thomas SowellJust look at the poverty rate before and after the ‘War on Poverty’ (1964)The rate at which poverty was changing went from declining to stagnating to increasing. This is some what obvious to me, when you make poverty comfortable people tend to not move up classes.What is even more damning is the effect this has had on minority families particularly the black community. According to both Brookings Institution[1] and Heritage Foundation[2], the number one predictor of poverty is single motherhood. The War on Poverty essentially subsidized fatherless homes creating generations of families reliant on government. The federal government runs more than 80 welfare aid programs; nearly all of them provide very real financial incentives for couples to remain separate and unmarried.This very issue has caused the single motherhood rate to spiral out of control in Black and Hispanic communities. The result is high crime, drug use and drop out rates.Footnotes[1] Work and Marriage: The Way to End Poverty and Welfare | Brookings Institution[2] Marriage: America’s Greatest Weapon Against Child Poverty
Is national income a good measure of general welfare?
I think you're using the term "welfare" in its proper economic sense: meaning benefit, happiness, ability to prosper, standard of living. So I'll answer in this context and avoid political or dogmatic statements about economic systems. National income, by itself, doesn't tell us very much about the standard of living in a country. The national income of India exceeds that of Canada but no on would claim that India was a better place to live for the typical member of the population. India's is higher simply because the population is 1.2 billion, there is enormous public-sector spending and high inward investment because of high interest rates and so on. What is more important is national income per head of the population. That measures the availability of goods and services per person. On that basis, Canada is about 16th in the world economy with a figure of $40,000 per head; India is 126th with a figure of about $4000 per head; one-tenth of the Canadian. Does this difference matter? Yes, because it correlates very closely with many aspects of human existence: - infant survival rises with national income per head - the general level of healthiness in the population, also rises - typical/average food intake per day, also - educational attainment, also - medical and health provision for the population, also - average age at death, also - amount of free time people get to enjoy life instead of just working, also - public safety, security, and crime detection rates, also - and so on. Get the idea? All these are low in economies with low national-income-per-head. So national income does measure something about the economic conditions of human life. But it is not a perfect measure. Rich countries are often not happier places to live; with depression and other mental illnesses, high levels of metabolic disease such as diabetes, and also serious dissatisfaction among young people who expect to get richer and richer.. Quite often poor communities, with low national income per head, are more peaceful places to live and bring up a family. With lower expectations, of course.
Can charity replace government welfare?
liberals get violent when they get their freebies threatened.........thank a democrat
Is a purely Capatalist society the best? Or is a little Communism and Sociliams good for a society?
Of course, I am not saying we should be a Socialist country, but I don't see a problem with mixing in Communist and Socialist ideas in with Capatalism. For instance, taxing the Billionaires at a much higher tax rate, and giving some of that money as social assistance is "fair" in my eyes. I don;t see anything "fair" at all about the fair tax. As long as the Middle Class is in the "low" tax bracket, it's a good plan to me. Same goes with socialism. While I don;t agree the government should take over all business, I think it's OK for them to prop up a failing business, like GM, to avoid doubling the US unemployment rate and creating a new Great Depression. So my question is: to all those who complain Obama is a Socialist or Communist, what makes you think Capatalism is the only way? It isn;t in the Constitution, so why do you have that assumption?
Who wins and who loses from inflation rise?
The big winners are people who: (1) Have a job. (2) Are able to increase their income to match inflation, either by negotiating wages as an employee, or passing expenses on to consumers as a business owner. (3) Have little savings and a lot of debt. These people increase their wages with inflation, while their debt becomes effectively smaller (the same size in nominal dollars, but the dollar becomes worth less). The losers are people who: (1) live on fixed income/unemployed/unable to negotiate wage increases. (2) have lots of savings and little debt. Their income and savings gets effectively smaller, and they don't benefit from debt getting smaller because they don't have any.