Is This How Unchecked Social Programs Hurt The Economy

What is the exact effect of black money on an economy? Where will this black money go? Will the major part of it go as savings or consumption?

The effect of Black money on the economy is multifarious.Underestimations- One of the major problem in calculating national income is presence of unaccounted money in the economy.Since GDP is calculated on accounted transaction the unaccounted transaction do not get added up to the GDP, thus the real value of GDP is not ascertained.The GDP calculated is often undervalued.Dual economy- When the flow of black money is high, it creates a parallel economy which works alongside the reported economy.Individual and organized effort to estimate black money reveals that the level of black money is almost 23- 26% of the reported economy.Against the Canon of equity- Adam Smith the father of economics in his book 'Wealth of Nation' gave 4 canons for taxation.The canon of equity is one among the four canons. According to the canon of equity, the rich must pay more tax and poor should pay less (Progressive taxation).This is social justice but the rich do not pay their fair share, thus the burden is carried on by middle and low income groups.Distribution of wealth and resources-Black money facilitates regressive growth in the distribution of wealth where the rich become richer and the poor becomes poorer.This leads to concentration of wealth in the hands of few.The rich having more means claim more scarce resources since money is not a problem, thus the poor do not receive their fair share of resources.Loss to the government - Taxation is one of the major revenue earned by the government.Tax evasion reduces the government revenue thus the government do not have enough resources to invest on infrastructure, social scheme for the poor and etc.THANK YOU. Criticisms are welcomed.

Why is economics called the dismal science? Is it because we are always dismayed by economics? Does economics never give us some positive solutions about our problems?

For some background on the term "dismal science" I encourage you to read this article by Levy and Peart: The Secret History of the Dismal Science. Part I. Economics, Religion and Race in the 19th Century. In short, the term "dismal science" was coined by Thomas Carlyle in his 1849 article "An Occasional discourse on the Negro Question" in which he criticized the economists of the day for opposing slavery. Back then, it was popularly believed that poor countries were poor because of the racial inferiority of the people who lived there. Economists had the unpopular (at the time) opinion that Africans were not inferior, rather that African countries tended to be less wealthy for other reasons such as a lack of capital and a less specialized division of labour. So there you have it, economics is the "dismal science" because a bunch of nineteenth century economists thought that all people of all races were equally deserving of liberty. I think that most people who repeat the term today are not aware of its racist background, and probably aren't voicing their support for the re-institution of slavery. I think the term has stuck around, as you suggest in your question, because people are often dismayed by economics. Economics doesn't frame the world in terms of "problems" and "solutions" but in terms of trade-offs. So, when people think we can "solve" pollution by switching from fossil fuels to wind and solar power, the economist points out that wind and solar have their own costs. For instance, they are far more expensive than fossil fuels, so people would have to accept lower standards of living as a larger portion of their incomes would go towards energy. When someone thinks we can "solve" poverty by taking from the rich and giving to the poor, economists point out how this will create perverse incentives for both rich and poor. Still, I think it's a little unfair that economics gets this title. After all, didn't chemists tell us that we couldn't turn lead into gold? And didn't physicists tell us we couldn't build faster-than-light space ships like in Star Trek? Economics just tells people when their social engineering schemes can't be achieved. But these schemes would have been unworkable whether economists explained the trade-offs involved or not.

How do politics affect an economy?

Economic laws are not affected by politics any more than the laws of thermodynamics are affected by them.Economic outcomes ARE affected by politics. Politics is the use of extra-legal power to achieve ends of rulers by violating equality principles- this makes it an ethical and economic peer to similar criminal violations. Here are a list of the typical ends rulers have:a. Manage the populace: Since the ruling caste (de facto) parasitically lives off of the populace, it must make sure they are both kept under control and productive. This is not as simple as it may seem. I call it effective demagoguery. One must maintain favor (whether elected or not) and minimize the visibility of parasitism.b. Enrich self, friends & family: I hope this doesn’t need explanation as it is omnipresent everywhere in every from of Govt.c. Socially engineer society to conform to one’s personal preferences. A lot could be said about this, but foisting one’s ideas of how others “should live” on them by force is weaved into the fiber of our lives to such a degree that we are as unaware of it as fish are of the existence of water.d. Wield power over others: A lot could be said about this, but I’ll leave it to the reader.All use of force to violate the rights of innocents tends to destroy human utility, though surely there are winners and losers. The more individual liberty is respected in a society, the more that society will tend to thrive.

Are Bernie Sanders' economic policies feasible?

Arguably, they have already been implemented in the rest of the Western world, so yes.Seeing that the Nordic model is most held up by Sanders:Healthcare is universal, although there are small fees for doctors visits in many nations (I’m thinking Sweden for adults). I suspect that Sanders would want something closest to the NHS system in the UK or perhaps the Canadian healthcare system, only with dental coverage and a universal prescription drug plan. Actually in the case of healthcare, it would be cheaper and lead to a better outcome.In much of Europe, tuition is free, although students do have to pay for their living costs while studying (some nations provide a stipend for this).In regards to manufacturing, many nations do run trade surpluses. Japan, Germany, South Korea, and I think most of the Nordic nations run a current account surplus.There is a more generous social safety net in most of the EU as well.Renewable energy has been led by nations such as Germany and Denmark. China is also becoming an increasingly large player in this sector.Other nations have undertaken huge infrastructure projects, most notably China, so that is quite feasible.There’s not much suggesting that it would not be possible. Certainly that would mean a major cut to military spending and a tax increase, but services would also increase.The barrier is political more than anything else.

Is democracy hurting Europe?

The nations of Europe faced numerous problems after WWII. There was little work because the factories were destroyed and even if they existed people had little money to buy what the factories would have produced. In that devastated environment government had to provide basic services. Who would become a doctor if no one could pay? How could hospitals remain open without people who could pay the bill?To avoid not just unrest that could topple governments but epidemics running unchecked the government created various forms of state health plans. Because unemployment was so high employers could pay starvation wages and fire people on a whim so protections were built in. The system worked magnificently to take them from rubble to thriving economies. The problems that have arisen are multiple. Free trade means many jobs once performed at a comfortable salary can often be moved to places where people earn starvation wages and can be fired on a whim. The birth rate has been low so the population is aging that increases the costs of social programs and many of wage earning age are unemployed because their job is now being done in places with low wages, few if any employee protections including workplace safety and few if any limits on environmental practices.

Is the welfare state economically sustainable in the long term?

Depends.. if the majority of the world countries are capitalistic, then as welfare country you will have a hard time to keep up with the global inflation because everything you import is expensive.Welfare economies tend to be steady and slow in growth rate while capitalist economy has faster growth and is wild.Soon enough the welfare social country becomes a communist country to keep up with its welfare promises, then it explodes to capitalist. Kinda like a star’s life cycle.Yet, if the world countries mostly are socialist or variable, then welfare countries can survive for a long period of time and provide everyone an IKEA life style.In conclusion, a system life span is dependent on how it can interact and adapt with the international environment.