OK, I'll try.Garbad_the_Weak said:I am too old for that bull. Seriously, I want to know.
That, Sir, is the stuff that comes out of the south end of a northbound bull.Garbad said:I won't argue with you no matter what,
All economic theories start from the same basic assumption; a scarcity of goods. In fact, Economics could be described as the method used by a society to allocate scarce goods among its members.I was sitting in Psych the other day and a thought occured to me. Capitalism is based on the transfer of goods and services for something, whether that something is money or another good or service.
Not really. There are inherent inefficiencies in a Free Market that have to be considered such as externalities, public goods, monopolies, and a lack of accurate information about the goods being traded.But the system becomes inefficient when people save extensively and spend very little.
You have to realize that every dollar that is spent by the Government is one less dollar that is spent by the private sector. And since the Government is a monopoly (an inherent Market inefficiency), the chances that Government spending is better for the Economy than the same amount being spent by individuals is slim and none.Where do you think tax money goes?
The government hires people to do work. Those people take their paychecks home and spend them.
http://www.sparknotes.com/economics/macro/taxandfiscalpolicy/section1.htmlSparkNotes said:When the government spends more on goods and services, the population, which provides those goods and services, receives more money. Thus, expansionary fiscal policy makes the populace wealthier and increases output, or national income.
Later on, an illustration of the money multiplier:SparkNotes said:When the government increases purchases, it directly increases output, or national income. But, there is a greater effect than just the actual amount of increase in government purchases. When the government spends more, the populace receives more. That is, because the population is the target of increased government spending, personal incomes, and thus consumption, increases.
So, in fact, government spending does indeed help the economy. By the way, there's also this thing called deficit spending. In moderation, it can be good for the economy (though in excess, it can devastate an economy--the question always is how much of it is a good thing).SparkNotes said:The second example we will work through deals with government spending policy. What is the total change in output from an increase in government spending equal to $20 million if the MPC is 0.8? To solve this, simply plug these numbers into the government spending multiplier: (change in government purchases) / (1 - MPC). This becomes ($20 million) / (1 - 0.8) = $100 million. A $20 million increase in government spending will cause a $100 million increase in output. When government spending increases, the populace, as the recipient of this spending, has more disposable income. When consumers have more disposable income, they spend some and save some. The money that they spend goes back into the economy and is saved and spent by somebody else. This process continues.
Never said it did--just saying that paying taxes isn't throwing your money out hte window never to be seen again. Someone back in the thread made it sound like paying taxes was like sending your money in an envelope to China.Garbad_the_Weak said:Proving government spending trickles down doesn't mean government spending trickles more than private spending.