Quote:
Originally Posted by gideongallery
one word
pork.
A government bill will allocate money not on what is best for the country but what is best for the districts represented by the congress. It results in stupid projects which have no investment value other than the jobs in a region. Once the money is gone those jobs disappear as well. When the money i is directed to investment, those that make money, and can be sell sustaining are rewarded, those that can't are not.
|
You're assuming all government spending is "pork", when earmarks are less than 1/10th of 1% of the overall federal budget.
Also, individual consumers will not allocate money based on what is best for the country, but what is best for them....that may, and often does, include putting the money in a piggy bank, paying off a credit card, or buying products that were manufactured in another country.
Quote:
Originally Posted by gideongallery
governments have to worry about appeasing the unions in a way that business do not, because quite simply unions can cost an official an election. The workers have to much power so yes government spending ends up being wasteful. Market driven investment is not so influenced so it becomes far more productive even with the act of buying stuff from china.
|
The union thing is hogwash. Unions vote democrat, period. The idea that government spending is less stimulative because union workers may do the job is ridiculous.
The private sector isn't going to build roads, bridges, tunnels, a new electricity grid, lay broadband lines in rural areas, etc....these are investments in the public interest that don't pay an immediate dividend to the investor.
Just like the interstate highways in the 1950's. There was no immediate return, no private entity could have made a profit by undertaking such a project, but the long term effects on our economy have been profound. (And there is also the short-term benefit of jobs for the people who build the roads, clear the land, etc)
Quote:
Originally Posted by gideongallery
you can't sell an investment unless someone else buys it, the transaction is balanced. So if person A sells the stock to pay down his debt person b must buy the stock.
The end result is the company keeps the money, in the investement coffers, while the banks get more lendable capital (the desired result). IF they spend it instead, that some business gets the money, and with lower taxes can give bigger dividends which again put money into the economy to pay down debt and free up lendable capital (the desired result).
The two examples you gave while rolling your eyes are examples of the types of business that would be help specifically by the loosening of the banks lendable capital.
And all the jobs that are created by those business is where the job growth is comming from.
|
This really made no sense. You're assuming the only reason someone would sell an investment is to pay off debt. You also assume that the bank will turn around and lend new money once an old debt is paid off.
Yet the banks have been given a shit pot full of new lend-able capital by the government, and that hasn't led to more lending. Also, my guess (and it's a reasonable one) is that the money someone would use to buy a stock, or a business, or whatever other type of investment, is currently sitting in a bank and not under a mattress, which means that it is already capital on a bank's balance sheet that can be lent if the bank so chooses.
Nobody has to sell a stock to pay off a debt so the bank can loan again. You really went off the reservation on that one gideon.
Banks not lending is a result of the trillions of dollars in toxic assets on their balance sheets. Cutting the capital gains tax so that someone will sell some stock isn't going to make that problem go away. (Especially considering that stocks have lost almost half their value in recent months, so almost anyone selling right now would be taking a loss and taxes wouldn't be a factor anyways)
The top economists in the country have told President Obama that for every $1 of government spending we'll get $1.50 in stimulus, for every $1 in tax cuts, we'll get 75 cents of stimulus. (Because the tax cut money may not be spent at all, or it could get invested overseas, etc)
The reason for the tax breaks to individuals is more a function of giving people a break during tough times than it is about stimulating the economy. (From Obama's point of view anyways)
Yet there are still all of these people screaming for across the board tax cuts, capital gain and dividend tax cuts, and whining about all of the "wasteful spending" in the stimulus plan.
We've tried the "republican way" for the past 8 years and now we're in the mess we're in, dontcha think it's time to try something different?