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Rich Countries Lag Emerging Markets in Growth, differences is in Government Spending
The simple explantion: Growth has lagged the developing economies, and the major reason has been that “government spending has been far more restrained than in past recoveries from major recessions.”
It is interesting that the more 'developed' countries become, the more cradle-to-grave goodies they provide their citizens. This leads to higher and higher debt, deficits, and lower growth. Seems like something pretty easy to notice, but darned hard to reverse course once it has started. The only expections are very small countries that can control many aspects of society. Singapore comes to mind. Certainly a developed economy, but very different from most of the others.
It is interesting that the more 'developed' countries become, the more cradle-to-grave goodies they provide their citizens.
Reply to @BobC: Statements like that fly in the face of all I hold dear about the growth of civilization. What purpose is achieved by leaving people behind as you develop? What purpose is government if not to serve the welfare of the people? What purpose civilization at all if not for improvement in the lives of humans? I don't see anything is accomplished by improvements in the ability to do commerce alone. Without people commerce is unimportant.
Governments are meant to serve the people. Governments that don't provide for the welfare of their people usually extract from the welfare of the people for the benefit of few to none. I hope improvements in people's lives are "darned hard to reverse course once it has started."
This leads to higher and higher debt, deficits, and lower growth.
I realize separating your sentences is causing a little "taking out of context". However, this seems to be the problem that you have in the arena of cradle-to-grave goodies. So you see the development of civilization as a process that causes debt and kills growth. Yet, as an investor, you surely understand the difference between investment and waste. And you understand diversification. So, when I invest in 100 children, some will be winners and some will be losers. Most will be just workers. But without the investment how much growth is likely for a developed country that has exhausted the potential of hard labor growth areas? You understand that investments need to be well designed.
It is interesting how we have gone from a nation that was "drawing down the debt too fast" to a nation that is "drowning in debt". So easy to change directions.
Yeppers, I'm with Anna on this one Bob. Our problem is not entitlements, although they have some issues, and it's not the welfare state. It's the gd military defense spending and how we somehow think we have the manifest destiny to be the worlds policeman. We have soldiers in over 100 counties around the world. It's bloody insane and it is the reason why we're bankrupt.
Bring the troops home and defend the shores and you could improve the quality, training and technology of our nat def AND cut their budget by $200B per year.
Hey rono- We have both put in our military time, and neither of us regrets that for one minute, so anyone who thinks that our observations are "anti-military" should be aware of that.
While I agree that we could undoubtedly bring back a lot of our troops, I'd be pretty nervous about our security if we didn't have a fairly strong presence in Asia right now. Kissinger may be a lot of things, but I think that he's right on with respect to balance-of-power in world affairs.
How about we let other folks around the world take care of things for a while? Geez, if we took that wasted natdef $ and spent it on infrastructure, it would create jobs and serve as a boost to the economy. Not like the $1T that they poured down the rat hole a few years ago. Very little of that ever went to projects. Most went to feel good things like giving $ to cities to keep cops or firemen. Nah. We need a real infrastructure program. Don't buy that man a fish, because he'll want one tomorrow. Teach him how to fish and don't answer the door.
Reply to @BobC: Our current debt/deficits have very little to do with what you characterize as "cradle-to-grave goodies." This has been discussed, graphed, & pored over in hundreds of articles since even before the recession: two rounds of large tax cuts, two unfunded wars, the unfunded Medicare expansion (actually a gift to Big Pharma) ... and finally, the recession-triggered loss of revenue and increase in automatic stabilizer payments (to prevent human misery and an actual depression) are the main, and only large, drivers of the federal deficits & additions to the aggregate U.S. public debt in the past decade.
In answering BobC, I'm with the rest of you. Anna expresses my own thoughts and convictions pretty well. The Military Industrial Complex (Eisenhower) is a greedy behemoth. But a more equitable way of providing for the Common Good would leave us in a much better place, too. Cutting the military is not the only answer. As soon as cuts to one piece of the budget get mentioned, what gets forgotten is the responsibility of the sickeningly, obscenely wealthy ones to contribute their FAIR share. To defend their way-too-low tax rate, they point to hard-dollar amounts paid. Fairness requires looking at that issue in terms of PROPORTIONS, not percentages. Uncle Mitt with boat house and jets and mansions, for example: tax him at current rates with all the stupid loopholes, he's paying 14%. He said so, himself. Why isn't that viewed as an abomination, I want to know? Tax the uber-wealthy in a PROPORTIONALLY fair way compared to the rest of us. Then driving through our cities would not need to be such an adventure every day, like driving to work or wherever through a bombed-out street-system. ...Oh, and I finally have THE answer to the question: "how much is TOO much?" ...You have an ELEVATOR in your garage or boat-house? Yes, you have way too much money. You have lost sight of reality. You are a greedy m-f.
I'm all for letting other folks around the world take care of things for a while. Articles in The Economist frequently annoy me because the the Brits seem to enjoy advising us of what they think that we should be doing with our national resources, with a notable absence of any contribution on their part.
Unfortunately, I don't see a lot of other folks with the capability of standing up to China at the moment. And I really do think that China does need a fair amount of "standing-up-to".
Hi Max- speaking of elevators, a few weeks ago I was reading an article that was gushing about the advantages of having your own dedicated elevator in your high-rise, allowing you to drive in to the elevator at street level, and then you and your vehicle are magically taken to whatever floor you live on, without having to go to all of the bother of getting out of the vehicle and parking it in the basement. Convenience, and enhanced security too- no bad guys waiting in a parking garage.
Talk about in-your-face TOO MUCH!!! (Of course, there is the offset that these folks are our "job-creators"- providing, that is, that you don't want more than minimum wage for your job.)
Interesting discussion you guys are having here. My aim in opening post and follow up was the interesting fact that government spending this recession despite the stimulus was much less than it was publicized in some circles. I also noted that government deficit started to reduce at an accelerated pace recently. The first is why this market cycle is executing at slow pace. The latter is probably a consequence of growth picking up.
Quite right, OJ. The perfect illustration of the fact that just because something CAN be done, does not mean it SHOULD be done. "Job Creators?" LOL. I'd like to tell those "Job Creators" where they should go. Maybe taking one of the so-called jobs they've created and let them try to live on $7.25 per hour. ....Oh, but such remarks will surely be seen as inflammatory. When the uber-wealthy rape the environment and pay employees peanuts and neglect workplace safety and inspections, that's "capitalism." When those who are impacted dare to say they don't like this state of affairs, they get accused of "Class Warfare." Yes, there is a Class War going on, being prosecuted by the uber-wealthy upon the rest of us.
Late to the spirited discussion . If you have followed BobC's comments through the years, you know that his instincts are to help, and not to lecture or take a political position. BobC's dispassionate comments are mostly true in my opinion as he did not say that goodies are the only or even the primary causes of our debt/deficits as some read into his comments. He only stated that the goodies contribute to deficits and tend to grow over time. I differ somewhat in that I believe goodies add to growth to some degree in the short term. Later I think BoBC meant to say exceptions instead of expectations. These cradle to grave "goodies" become "baddies" when they among other things, 1.) weaken personal initiative and the feelings of personal responsibility to be the best one can be, or 2.) damage the real and implied social contract between generations. Personally I am concerned that current Americans in general , and we boomers in particular are not considering enough the best interest of future generations as we continue to spend. We seem to want subsets of Americans to make sacrifices instead of asking everyone to contribute in some way to solving this trillion plus $/year deficit we find ourselves enjoying. Glad this was labeled off topic and enjoyed the different points. All done.
I can't argue, MourningStars. I can talk about this sort of stuff only so far before I run up against the ethical issue(s) involved. You can't divorce ethics from money. It would be like divorcing fish and water.
Reply to @MourningStars: Thanks, MourningStars. You translated my comments very well. My only other comment is that as I have observed our federal government over many years, there is clearly no effort to make any really hard decisions. The politicians talk a good talk about balancing budgets, keeping the 'safety net' viable, and keeping taxes fair (and that is open to a wide discussion), but they continually fail to look at any kind of big picture. The Social Security debacle is really fairly easy to fix, if we move full retirement age to 70 and implement some kind of means testing, or a number of other ideas. But unlimited re-election of our reps in D.C. is always a barrier. And this is just one agenda item that fails to gain any traction. When the feds continually manipulate inflation, employment, GPD, and other statistics to serve their own purposes, no matter which party is 'in power', it is easy to see why so much of the populace has no trust at all in our elected D.C. officials. Ethics? Oh, my. Oh, my. Thanks again, MourningStars.
We-all are well aware that you're neither a right nor lift-wing whacko. Wish we were able to elect a batch of folks like you to congress. Unfortunately, most folks like you are busy making an honest living. Thanks for your comments- right on as usual.
Comments
http://www.calculatedriskblog.com/2013/04/update-federal-and-state-improving.html
Governments are meant to serve the people. Governments that don't provide for the welfare of their people usually extract from the welfare of the people for the benefit of few to none. I hope improvements in people's lives are "darned hard to reverse course once it has started." I realize separating your sentences is causing a little "taking out of context". However, this seems to be the problem that you have in the arena of cradle-to-grave goodies. So you see the development of civilization as a process that causes debt and kills growth. Yet, as an investor, you surely understand the difference between investment and waste. And you understand diversification. So, when I invest in 100 children, some will be winners and some will be losers. Most will be just workers. But without the investment how much growth is likely for a developed country that has exhausted the potential of hard labor growth areas? You understand that investments need to be well designed.
It is interesting how we have gone from a nation that was "drawing down the debt too fast" to a nation that is "drowning in debt". So easy to change directions.
Bring the troops home and defend the shores and you could improve the quality, training and technology of our nat def AND cut their budget by $200B per year.
peace,
rono
While I agree that we could undoubtedly bring back a lot of our troops, I'd be pretty nervous about our security if we didn't have a fairly strong presence in Asia right now. Kissinger may be a lot of things, but I think that he's right on with respect to balance-of-power in world affairs.
Hi Joe,
How about we let other folks around the world take care of things for a while? Geez, if we took that wasted natdef $ and spent it on infrastructure, it would create jobs and serve as a boost to the economy. Not like the $1T that they poured down the rat hole a few years ago. Very little of that ever went to projects. Most went to feel good things like giving $ to cities to keep cops or firemen. Nah. We need a real infrastructure program. Don't buy that man a fish, because he'll want one tomorrow. Teach him how to fish and don't answer the door.
peace,
rono
I'm all for letting other folks around the world take care of things for a while. Articles in The Economist frequently annoy me because the the Brits seem to enjoy advising us of what they think that we should be doing with our national resources, with a notable absence of any contribution on their part.
Unfortunately, I don't see a lot of other folks with the capability of standing up to China at the moment. And I really do think that China does need a fair amount of "standing-up-to".
Regards- OJ
Talk about in-your-face TOO MUCH!!! (Of course, there is the offset that these folks are our "job-creators"- providing, that is, that you don't want more than minimum wage for your job.)
.....OOPS, you said you were referring NOT to Jimmy.... My bad. And yes, Uncle Warren DID say that.
We-all are well aware that you're neither a right nor lift-wing whacko. Wish we were able to elect a batch of folks like you to congress. Unfortunately, most folks like you are busy making an honest living. Thanks for your comments- right on as usual.
Regards- OJ