A good "revenue enhancement" idea

[CARLHAYDEN]

We do NOT need more 'guest workers' as there is already high unemployment in this country (particularly for those with limited job skills) as experience has shown us.  When a business is compelled to terminate a significant number of illegals, they are inundated with job applications from Americans seeking unemployment.

Yup, from Americans seeking unemployment checks, not from Americans seeking employment, as a number of the jobs are sufficiently physically demanding that getting American employees is difficult or even impossible, as the farmers of Georgia have found out to their distress.  Also many of those jobs are seasonal labor, not permanent jobs. They also offer little to no opportunity for advancement.  For seasonal physical labor, a guest worker program makes sense.

What is happening is that some employers prefer to hire illegals as they can intimidate them to ignore environment and safety laws, which they would have problems getting American workers to flout.

Here is one area we do agree on.  Solving the illegal immigration problem will require strict enforcement of employment laws.  Where we seem to differ is that you seem to think we need to focus on the employees, while I think we need to focus on the employers.  Unless we return to the days when we ignored civil rights, no employee-focused approach will work well enough to do much.

Ernest,

As I have previously noted, we need a full spectrum effort to deal with illegal aliens, including enforcement of existing laws against employing illegal aliens.  So your assertion that "you seem to think we need to focus on the employees" rather than the employers is simply false.

Why do you keep misrepresenting my position?  Are you incapable of comprehending what I have posted?  Or is it that you are unable to deal with my position and therefor deliberately misrepresent it?

[Gustaf]

Gustav,

If we allow for:

State spending in 2011 of $ 1,303,000,000,000.00 and Local spending in 2011 of $1,577,300,000,000.00 (numbers NOT POOMA)

http://www.usgovernmentspending.com/#usgs302a

and we assume a 2011 GDP of approximately $15,319,155,000.000.00 (the government estimates $15,079,000,000.00, but I believe reducing government will increase the GDP), then since 30% of $15,319,155,000,000.00 is approximately $ 4,595,747,000,000 and if we subtract state and local spending from that number we would have federal expenditures totaling  approximately $ 1,715,447.00, which would be 11% of the GDP. (Please feel free to recalculate using government estimate of GDP if you prefer.)

Now, I’m a reasonable person and am willing to have federal expenditures reduced to approximately 18.2% of the GDP, which would be approximately $2,288,086,000,000.00., which is a whole lot less than the approximately $3,800,000,000,000.00 which Obama wants to spend.

Oh, and that total government spending would amount to approximately 34% of the GDP!  Significantly above the 30% level you suggested.

Next, you are quite correct that “the economy in itself is not the only thing that matters to society.”  That is a point I made some time ago, which you cavalierly rejected.  Robert Frost penned a rather eloquent poem about the dangers of big government.

Now, as you correctly pointed out, mere superficial expenditures over a long period of time have little relevance if inflation (and I would add, per capita) allowances are not included.  One of the problems with much of social science is that good data (such as GDP) does NOT go back “say 200 years.”

I did notice you did NOT answer my question.  So, do you really think the larger the percentage of the economy consumed by the government, the more prosperous the economy? 

Also, we cannot look merely at government expenditures, but must also include the impact of government regulation of the economy.

I do, however, want to thank you for your long term perspective (yeah, I know, Keynes said that in the long term we’re all dead), as it gives me a chance to quote to you a part of a seminal American political document (it’s a little over 200 years old):

“He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.”

The bottom line is that the federal government went crazy over the past decade, increasing its percentage of the GDP by more than 6%!

I'm not sure I follow the logic of your math. If you're trying to say that the 30% level would require spending cuts, I agree. Of course, those cuts would not, over time, be all at the federal level. An improved economy will also decrease outlays as % of GDP by itself (with fewer people being on benefits, for example).

Your question is misdirected, in my opinion. I don't think that there is, at all levels, a determination of spending so that increased spending always has unambigiously negative or positive consequences for the economy.

For example, Sweden has had the highest or second highest government spending in the world for many years. Yet, our economy is clearly better not only than most developing countries but certainly compared to say Greece or Portugal. The point of that is not to prove that government spending is necessarily always beneficial, but merely that you're oversimplifying the connection.

Things that I think are very important for a society is to have a functioning free market, where competition is allowed to spur innovation. And a strong legal system which is robust to corruption and provides clear rules for the agents in the market to follow. And a framework for public finances which prevents politicians from over-spending and running deficits. And a simple tax code which does not incentivize people to devote resources to improductive activities like avoiding taxes. And a government spending that goes to actual services valued by citizens (say, education, healthcare and so on) rather than generous retirement benefits for public employees or pork projects designed to win voters.

I think those things are more important than whether the level of taxation is at 25% or 30% of GDP and I think this is backed up by the track record of different economies around the world.

[CARLHAYDEN]

Gustav,

First, you suggested aggregate government expenditures should be around 30% of GDP.  I was willing to settle for 34-35% (depending on estimate of GDP), and provided numbers (and source) for break-out of said expenditures/outlays,

Second, my basic point is that the increase in government expenditures (as measured by percentage of GDP) has been mostly at the federal level, with the highest rate of grown being in the last two and a half years.

Now, with the notable exception of Illinois, state and local governments arouund the United States have been involved in modest to significant expenditure reductions.  So, once again, the problem is (with the notable exception of Illinois), federal spending is out of control!

Third, when examining statistics on government policies, since a number of factors impact those numbers, to examine them from several different methodoligies.  One is time, a second is cross-national, a third is factorial analysis, but to name a few.

Now,  one of my favorite economists is Frecerich Bastiat, who was the first to really grasp the time element in economics.  Now, if you look at the history of governments moving to collectivism (the Obama approach), you rather consistently find a reduction in economic activity, although there is a time 'lag.'

Second, with respect to cross-national comparisons, I suggest you remember that in the nineteen seventies, while East Germany was the most sucessfuly of the eastern european economies, it lagged far behind West Germany.

Third, there really is rather massive evidence that (all other things being equal) that when the tax load  begins to exceed a quarter of aggregate income, disincentives for productivty result.  Milton Freedman documented this in one of his books in the late seventies/early eighties (can not remember the title off the top of my head).

[Torie]

Given all of the above bullet point assertions, what comes to my mind is just why does Sweden's economy (to pick a country not at random just because of the identity of your seemingly perpetual interlocuter ) work reasonably well, with a comparable standard of living to the US?  Just asking.

[CARLHAYDEN]

Torie.

There are several factos at work,

First, unlike most of Europe, Sweden was able to avoid the costs and devestations of two world wars and the cold war.

Second, Sweden does (to an amazing extent) live off the heritage of some geniuses of the industrial age.  Just about everybody knows about Nobel, but some Swedish products are world class (the Bofors antiaircraft gun for example, which is used around the world for more than fifty years as one example).

Third, Sweden has profited from its iron ore exports.

Fourth, Sweden has significantly greater agricultural production than the other Scandanavian countries.

There are a number of other factors, which I am sure that Gustaf can provide.

[Torie]

Thank you CARL. We can both look forward together to Gustaf's response.