Comment 29348

By A Smith (anonymous) | Posted March 05, 2009 at 13:37:33

JonC >> If you can find a single statistician that would back up your 'facts' based on a few years of cherry picked data, they should be fired from whatever they're doing.

Your opinion, nothing more.

>> I could easily apply "it appears that if you want a strong economy, you have a large military budget (over 10% of GDP) a moderate non military budget and you make sure that debt to GDP does not increase" to North Korea.

If you are saying that the economy of current day North Korea is the same as 50's-60's U.S.A, then you either extremely ignorant, or a liar, which one is it? Just to give you a head start on some research, 75% of the economy in 50's- 60's USA was in the hands of the private sector, do you think it's that high in North Korea today? More like 1%, if that. How can anyone take you seriously if you are willing to label completely opposite economic structures the same?

Furthermore, North Korea currently relies on China to subsidize large amounts of its oil and food (kind of like Hamilton), whereas the U.S. was a net creditor in their economic Golden Age. Once again, your arguments don't make any sense. If you want to make comparisons, they have be based on facts and not just your opinion.

>> You can only grasp two maybe three variables at a time,

E = mc2. This is a simple equation, with just a few variables, but so what? The point is that there are variables and then there are variables. The variables I reference, namely debt to GDP, military spending as % of GDP, non military spending as % of GDP, private sector spending as % of GDP, aggregate billions of individuals transactions and so they allow us to look at trends and basic correlations.

If you ate a piece of food that cause you to get sick, would you eat it again? I mean, the first time you ate it it was on Monday, but today it's Tuesday, maybe it wasn't the food, but the day you ate the food on, what about that? Or maybe it was the colour of the shirt you were wearing when you ate the food, maybe that's it. You could go on like this forever, but most people would be satisfied to place the blame on the food, why? Because it makes sense, it's not 100% proven, but most things that involve humans, like an economy, never can be. If you don't think that the level and type of spending that takes place in an economy is important, then what is? Tell me what is important?

>> If there was a simple solution to a great economy, everyone would be doing it.

There is a difference between knowing the solution and being willing to embrace the solution. That's why people make decisions they later regret. It's not a lack of knowledge, although in this case it probably is, it's that most humans don't want to sacrifice in the short term for long term gains. That's why people would rather spend than save. Even though they know it's unsustainable to build up credit card debt, they do it anyway. Everybody knows it's probably wise to build up a nest egg, but how many people actually do it? It's not a lack of knowledge, but willpower/discipline.

The same goes for building a strong economy. In the early nineties, Canada had little choice to reduce our government spending, our back were up against the wall. However, after Chretien and Martin slashed spending, the result was an economy that was one of the best in the world during that time period. Our discipline produced great results. Today, the opposite is occurring, everybody is whining about how bad things are, but instead of cutting government benefits, the American people are borrowing from China. The result is a stock market that seems to fall every day, wiping out retirement plans and people being put out of work.

In the golden age (50's -60's), the amount of money that American people paid in taxes (pain) was about 25-26% of national income, but the amount of non military goods and services (stuff like schools, health care, welfare payments, food stamps, housing) they received in return was only about 16-17% of GDP. Today, they pay 29.03% of national income in taxes, but get 29.66% back in non military goods and services. Therefore, in the boom time, the American people got much less back from government than they gave to government, whereas today, they actually get more from government then they pay in taxes. If you fail to see the significance of this, then you are blind.

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