This graph uses the same numbers Perot uses.
By the last few years shown in this chart, we had even managed to balance the budget.
So, what happened?
Thursday, October 7, 2010
The Growth of Federal Spending
This graph uses the same numbers Perot uses.
By the last few years shown in this chart, we had even managed to balance the budget.
So, what happened?
Subscribe to:
Post Comments (Atom)
5 comments:
Nope. Unacceptable. Don't tell me what happened next.
Tell me what happened to all the great things that were supposed to happen, after we cut government spending.
Art
Hmmm...isn't it true that the rise of the financial industry as a percentage of GDP occurred largely from 1980 onward?
My memory of the exact numbers is imprecise here but I'll venture that the percentage of GDP attributable to financial services sector (it wasn't called that then) went from around 7% to 40% by 2000 or so.
I may be confusing GNP and GDP. I do know however that government spending could still rise if GNP grew due to financial industry profiteering. I can also see how the government and statisticians (and the politicians who care about these numbers) have a vested interest in seeing GNP/GDP go up.
If the real economy were suffering, it's only fitting that something other than the service sector was chosen to replace it, at least statistically.
We know pushing piles of paper around and creating derivatives/shadow banking profits might look good on paper but nothing is being made. Therefore this sea change can't do for the middle class what a real economy can, nor will stimulus/G spending solve the fundamental problem.
I love your payroll tax holiday and other ideas. Using money--essentially free as you point out--to eliminate debt is the healthiest use of money. It would cut out the banks and their profits though.
And I love taking credit for things, JB, but the payroll tax holiday is Warren Mosler's plan... Yeah, my plan would cut down the size of the banking and finance sector but -- as you note -- that sector has grown disproportionately large since 1980 or thereabouts.
GNP and GDP are almost indistinguishable in my graphs comparing them.
You write: "We know pushing piles of paper around and creating derivatives/shadow banking profits might look good on paper but nothing is being made." This is exactly the problem. Nothing is being made, only extra costs. There is no production. There is only facilitation. Remember Milton Friedman's old saw: "the quantity of money relative to output." Well, you don't get output if you don't get production.
Let me see if I have numbers to do a graph showing the growth of the finance sector, relative to GDP. Definitely worth a look.
Art
I see what you are saying, JB. If we made GDP bigger by allowing the financial sector to expand, that would have helped make federal spending look smaller, but it wouldn't have done anything for the middle class.
Excellent point.
It would also have helped GDP look bigger without having done anything for the 'middle class', which might be sort of an important point.
Especially since the reported GDP growth (i.e. even without taking this growing nonproductive financial portion into account) from 1980 onward has been slower than it used to be (http://newarthurianeconomics.blogspot.com/2010/09/yesterday-and-today.html). So, the "real" part of the economy has apparently been doing even worse.
Post a Comment