Can We Stop with the “Socialism” Nonsense Already?

I see an alarmingly high number of commentators and pundits referring to the USA as some sort of failed socialist state these days.  Obviously, the healthcare debate has much to do with that, but from a more macro perspective it’s really all about the broader government spending picture.  People seem to have this perception that the US government is firing money out of rocket launchers like never before.  But are we really a failing socialist state?  The data doesn’t seem to confirm that at all.

If we look at total government expenditures as a percentage of GDP we’re still in high historical territory.  The most recent level of 34.8% is almost as high as any previous peak.  Then again, the latest recession was worse than any recession in the post-war era so it’s not surprising that government spending kicked in as a result of automatic stabilizers and the recovery act (tax receipts fell as a result of decreased output so the deficit rose automatically – this isn’t “socialism” kicking in, it’s the simple math of how a budget deficit works in a recession).

socialism

 

But let’s put this in the right perspective.  The historical average government expenditures as a percentage of GDP is 32.3% over the last 50 years.  That’s 2.5% lower than today’s levels.  But keep in mind we’re coming off the historical high of 39% at a rapid pace.  In fact, it’s been the private sector that has increasingly picked up the slack during the last few years.  If anything, capitalism is winning again.  And if we were “socialist” in 2009 then we’re more than 4% less “socialist” than we used to be and quickly approaching our average “socialist” level of 32.3%.

socialism2

 

What’s even more interesting about this data is seeing it by Presidential history.  If we were to list the Presidents by how “socialist” they are according to their historical average level then the list would look like this:

MOST “SOCIALIST”

1.  Barack Obama (37%)

2.  GHW Bush (34.1%)

3.  Ronald Reagan (33.6%)

4.  GW Bush (32.6%)

5.  Bill Clinton (32.1%)

6.  Jimmy Carter (31.2%)

LEAST “SOCIALIST”

If we’re becoming a socialist state (which I don’t think we are) then some of the biggest contributors to that progression are the very people who are often placed on pedestals as the shining beacon of the “free market”.  In fact, out of the 4 Presidents who have presided over periods when the historical average was breached, 3 of them are Republicans.

Anyhow, I think we can all agree that 34.8%  vs 32.3% isn’t the equivalent of a socialist state veering out of control.  I don’t think any of the Presidents on this list have presided over anything remotely close to a socialist state.  And I think that when we put things in the proper perspective we can see that people are probably being a bit hyperbolic in the use of such terminology.

NB – Please feel free to use the comments section to leave your hyperbolic comments about how we are a failing socialist state.  

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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  • http://pragcap Michael Schofield

    Thank you! Mostly it’s just a scare tactic used on the gullible. And a favorite rant of the “Markets can fix anything” crowd.

  • Cowpoke

    Cullen get real, your a card carrying socialist.
    Please see your SS# on your card for proof. :)

  • Endest

    All lies! You are a Marxist tool sent to lull the American people into giving up our Freeeedommm!

  • Endest

    All kidding aside thanks for the good data. This is what we need to focus the debate on the real world. Dems can keep coasting along if the Republican party is stuck in fantasy land. Despite what some folks think the American people are not stupid. The reaction to the shut down proves that again. Need a real world opposition to spark real world change.

  • Anonymous

    Spending as a % of GDP is not an accurate indicator for social spending, its the composition of that spending that is important.

  • http://orcamgroup.com Cullen Roche

    Thanks Endest. I am just trying to provide a balanced perspective of things. Anyone who says the current 34.8% level is the dividing line between socialist and capitalism is smoking some good stuff. The “socialism” war cry is a good sound bite I guess, but doesn’t actually reflect reality.

    FYI, your email has three bad letters in it that get spammed here. M M T. That’s why your comments aren’t showing up right away. I unspam them, but I just figured I’d let you know.

  • http://orcamgroup.com Cullen Roche

    Do you have data showing that position? I am all ears if you think I am wrong here. Thanks.

  • Suvy

    Most of the budget is related to Medicare, Social Security, and defense(war) spending too. If we can cut those numbers down, we can really easily fix the budget issues.

  • http://brown-blog-5.blogspot.com Tom Brown

    The conservatives will point to some radical protesters during the Bush years carrying signs showing Bush as a Nazi or Hitler, and they’ll bring up the 9-11 truther’s (the people that think Bush carried out the attacks on 9/11 for his own political gain) and say that these are examples of “Bush Derangement Syndrome.” They are absolutely correct!!

    However, I think the opposite has happened in an even bigger way: “Obama Derangement Syndrome” and it’s been going on for years. Some conservative commentators (e.g. at the Washington Post … e.g. Jennifer Rubin) now regularly speak of “ODS” as something afflicting their side, and to their detriment.

    I think part of the over use of the word “socialism” comes from ODS.

  • http://topdownoutlook.blogspot.com Matteo

    It does not sound a lot a socialism, especially from a European perspective. Indeed, in the Euro zone government spending as a % of GDP is well above 50% in France and close to 50% in Germany and Italy

  • Suvy
  • Cowpoke

    Tom, seems like there’s also an awful lot of TPDS (Tea Party Derangement Syndrom) on the left these days as well.

  • Suvy

    http://www.web-books.com/eLibrary/Books/B0/B62/IMG/fwk-rittenmacro-fig12_003.jpg

    I think that government spending here includes state and local as well. If you pull out state and local spending, it’d be much worse. We’re also entering a secular demographic shift as well since the baby boomers start to retire.

  • Tim

    Are those federal government only, or do they also include state and/or local government?

    And shouldn’t we also look at several other things like cumulative tax burden at all three levels of government and regulatory burden as part of our assessment about whether the US is becoming more or less socialist?

    I look at this question as a spectrum that the US is moving between the two extreme poles, namely free market capitalism and communism. Or, if you want to chop off the extremes that are difficult (if not impossible) to achieve and maintain in practice on the large scale, call it the capitalism-socialism spectrum. Where we are on the spectrum is both an absolute and relative question.

    Some aspects like government spending as a percentage of GDP shown above are reverting to the mean by becoming less socialist in terms of the big number, but I would echo the point above about the composition mattering (for example, is a percent of GDP going to military spending considered socialist spending?) and I would also point out that other trends like tax and regulatory burdens may generally be moving the other way (I’d argue both of those generally are).

  • DanH

    Transfer payments are 2% higher than they were in 1975 so that means we’re a socialist state now?

  • Cowpoke

    Tim, Good point, Bush and Obama get hit for Regulation increases
    Here’s a great read on regs/rules:
    http://www.heritage.org/research/reports/2010/03/red-tape-rising-regulation-in-the-obama-era

  • http://brown-blog-5.blogspot.com Tom Brown

    Maybe we should re-adopt “Godwin’s Law”

    http://en.wikipedia.org/wiki/Godwin%27s_law

  • http://brown-blog-5.blogspot.com Tom Brown

    … actually a corollary of this law: the first side to go there loses the debate!

  • Mercator

    What’s wrong with Socialism?

  • GWS

    Why didn’t you draw the regression line v. a simple average? The 50 yr trend is undeniably up. We are not going to regress to the mean…if we are lucky, we will regress to the trendline.

    And what about the future forecast? Add in SS and Medicare tied to baby boomers and we will likely be to 40% in 10 years. This assumes the CBO got Obamacare forecast right….same folks who missed LT Medicare forecast only by 700%…the wrong way.

    This doesn’t necessarily mean we are “socialists” IMO….just that we’ve made commitments to a massive govt programs, largely that will blow up based on demographics. Obamacare is a complete unknown at this point. We are off to a roaring start….

  • Conventional Wisdumb

    Is it Presidential for the President to declare that we are at risk of defaulting on our debt?

    Does he actually believe this?

    There is zero chance we will default and even without a debt ceiling increase we have enough revenue to pay our creditors their interest payments 10 times over. So we can only conclude that our President and Harry Reid are not telling the American people the truth in order to scare them. I don’t call that leadership, I call that a complete and total failure of leadership.

    Especially from the two people who voted in 2006-7 to not raise the debt ceiling. Were they terrorists and arsonists back then? Were they unpatriotic?

    The idea that the CEO of our country would say this to score cheap political points against his opponents does nothing to allay the concerns of those, approximately 47% of people who didn’t vote for him in the last election. The President is at 37% approval for a reason.

    Setting up the Strawman of “socialism” to attack those who disagree with the President’s policies is nothing more than an ad-hominem attack completely unworthy of this blog. Reasonable people can disagree without having to resort to cheap shots.

    Rant over. :)

  • Cato

    I agree with Tim and Cowpoke. Measurements of freedom require more than calculating government expenditures as a percentage of GDP. Government regulations do not show up as government expenditures, but their effect on the economy can be even greater.

  • http://orcamgroup.com Cullen Roche

    That would be a pretty unfair representation of the data. The data is extremely skewed by the financial crisis where GDP collapsed and govt spending remained steady (just as it always does, but also in large part due to automatic stabilizers). If you’d presented this chart in 2007 we’d be on a very steady trend towards less govt. But the crisis skewed all of that by an enormous margin. And anyone who blames all of that on one President is skewing the facts even further.

  • Juan Notes

    Obama are is totally Socialism. Just the way the law discriminates Nd punishes productivity. Not to mention all the different methods of taxation to pay for the overhaul and the administration of the last. This is the wrong direction for the US Economy and Healthcare.

  • Christopher Dobbie

    Can you break down the numbers into how and where it’s been spent over time, now that would be worth something.

  • GWS

    so take out 2008 and beyond–fair enough. Your telling me the regression line is flat? I don’t have the data but there’s no way. And the future forecast? The reality is we are going to spend more bc we committed to huge govt pgms (SS, medicare, medicare part D, exploding disability (ie LT unemployment). Obamacare could blow it all up but let’s wait and see. I agree–to call us socialist now is stupid….in 20 yrs we may not look much different than Europe.

  • Kristian Blom

    Thank God for some clear thinking with actual logic included! Americans should travel to all these “Hell holes” they claim to be failed Socialist states and experience for themselves what the truth is rather than allow themselves to be conditioned by our weak media.

    Awesome Cullen,

  • http://www.madcapitalist.com/ Mark Cancellieri

    Who cares what you call it? The fact is that our economic freedom has been experiencing a steady decline, and we are paying the price for it.

  • Shorehaven

    Extropolating off of the USGovernmentSpending website we are at a 39.2% level of public spending.

    For 2013 the projection is:
    16.202 trillion GDP
    3.685 federal spending of which .558 trillion is sent to the states
    1.535 state spending
    1.698 local government spending
    6.630 trillion for combine governments

    In recent years the increase in government spending has been coming from the state and local levels, not the federal level. The combine state and local levels are at a 19.9% level, where historically they were at 10% or less.

  • http://orcamgroup.com Cullen Roche

    No, it’s up. But that’s 100% due to the 60’s. If you just look at the period from 1970-2008 the line is perfectly flat. In other words, there has been no increase in the last 40 years.

    Look, I am not trying to argue that the govt doesn’t play a bigger role than it used to. It does to some degree. But is it really fair to get all hyperbolic about this and start screaming “socialism”? I don’t think so.

    And keep in mind, you’re talking to a small business owner and someone who deals with a huge amount of red tape every year. I think I am a fairly unbiased observer. In fact, if anything, I am the type of guy who should be wary of anything the govt does….

  • Geoff

    “average socialist level” lol :)

  • GreenAB

    greetings from “communist” Europe! ;)

  • http://pragcap Michael Schofield

    The teaparty-types have been around for years. The dixiecrats and John Birchers preceded them back in the 50’s and 60’s. What binds them all together is racism. The McCarthy-ites were pissed at Eisenhower for integration. In the 1960 presidential contest Nixon was to the left of Kennedy on civil rights and it possibly lost Nixon the election. 1964 saw Goldwater and the Birchers vs the Kennedy civil rights era and Johnson won so the dixiecrats jumped ship to the repubs. Then Nixon was elected and was to the left of most of what we see today. So “conservative” Eisenhower, Nixon, Reagan, and Bush jr. all grew Govt and funded the dreaded “brown people”. Bad enough civil rights but money too. The teapartiers are the latest incarnation of a very cynical and frustrated group (did I mention racist?) who just can’t seem to win the prize and now a brown person is president! Handing out THEIR money to other brown people! SOCIALISM they cried, a Jewish plot to enslave the white race, and now they even get medical care! “Demographics are turning against us”, they wept, seeing this was their last chance for a more Godly ( white) govt. We must burn it down and rebuild in the tradition of the Old South they declared as they waived their confederate flags in front of the White House… Socialism as a political tool could never make it without the race-baiting that goes along with it. My apologies to those anti- socialists who are merely paranoid. Good day.

  • wkevinw

    1. Yes, most of the recent growth in government spending has come from state and local (not federal)
    2. This is a very difficult thing to measure. There are several academic papers that will make your head spin where they tried to figure out “who is most socialist”, by filtering out things like military spending (which is not easy to do by the way), discretionary spending (which continues to decline, by the way), etc.
    3. I think the unfunded mandates have to be factored in somehow.

    What you are witnessing is the decreasing confidence several stakeholders (e.g. bondholders, taxpayers) have in the US systems. Another type of “bank run”, as I call it.

    I am sure that during the early 20th century, the bankers who had runs said, “this is totally unnecessary, why is this happening?”.

    A lot of people are saying that today too. Again; it’s about the confidence- something not easy to model linearly, for sure.

  • Anonymous

    my only position is that you need to drill down into what makes up such spending before you can (or can;t) make your claim.

  • ehcor nelluc

    a third of gdp is govt spending – that seems pretty socialist to me. 100% would be Communism. Less than 10% (I’m estimating) is more like the America of a hundred or more years ago when we were growing super fast, quickly becoming the envy of the world. Now we’re more like France – lots of pretty things to see, but a very nasty underbelly of dependency and debt.

  • Ivan

    This is plain ridiculous. Let the pundits come to France, they will see a proper socialist state now. Not a failed socialist state yet though, but we are not that far.

  • Johnny Evers

    Those are good numbers, thanks.
    You see in health care spending that the federal government is passing those costs along to the state.
    You should also count the money in the Social Security Trust fund as ‘spending’ as that is money that is ticketed for future spending but is not backed by any revenue source.
    I personally am most worried about the unfunded health care costs coming down the road. Our commitments are rising much faster than our receipts.
    The discourse is getting really nasty. Even on this site, which is usually very civil, there are people who can’t deal with the numbers and prefer to deal in invective.
    If you argue for socialized medicine, don’t call us names when we call it what it is. And if you don’t provide evidence that tax receips will support the unfunded mandates, just come out and say that printing will be the answer.

  • Auburn Parks

    What budget issues? Does the non-Govt have too many NFA’s right now? I could have sworn we still had a full-time unemployment rate (U-6) of ~13%. Is the private sector going to go on another debt expansion right now to fund increased demand and spending? Or do you think that magically we’re going to become a net exporter in the next couple of years? There aren’t many options for increased spending.

  • Auburn Parks

    Any group of people that consistently say the types of stupid things the tea party people say, deserve all the derangement system they get.

    “spending is out of control”
    “run the Govt like a business”
    “we’re running out of money”
    anything and everything about basing laws on the bible
    and on and on.

    And for the record, any Dem who says anything that stupid deserves to be ridiculed as well.

  • Auburn Parks

    You obviously don’t know how the Treasury spends money, so you are forgiven.

  • Auburn Parks

    Seriously, do you guys even read this blog? There is no budget constraint except for inflation and the foreign exchange rate (if you think a strong dollar is important). The federal budget is not like a regular budget.

  • Shorehaven

    State and local spending averaged less than 10% before 1960 and probably 15% since. It looks like they are leveling off around 19 to 20%, but who knows.

  • Auburn Parks

    Such ignorance. 100 years ago we were coming out the worst banking crises we ever faced. J.P Morgan had to literally bail the banking system out. Once that was finally over, we had a few years of growth until it all went under again during the Great Depression, which lasted for 10 years. We experienced what, like 5 or six depressions before the federal reserve and fiat money. Now we’ve experienced two and this one has not been that bad at all thanks to the NFA creation by the Govt’s deficit. We had a Civil War, we were certainly not the envy of the world. I seriously can’t believe that bit of revisionist history you just put on display there.

  • Auburn Parks

    Much better for that spending to be done by the dollar sovereign and not states and local Govts. They actually need the tax revenue to spend money.

  • Johnny Evers

    I understand that.
    Do you?
    Really, what you and this blog are calling for is a federal budget that is funded primarily by money created by the central bank.
    When you look at the trajectory of the unfunded mandates, that is inevitable.
    This is something new, although Japan is showing us what this will look like.
    It may be that you are right, in that a) the Fed can buy all the debt the Treasury needs, and b) every dollar created this way generates economic activity but does not cause inflation.

  • Auburn Parks

    You comment makes no sense. The Fed can not buy USTs directly from the Treasury. Thats why QE is a net zero when it comes to creating net financial wealth. Your net worth is not any higher the day after you sell your T-bond than the day before. Here is a pretty good breakdown of who owns USTs:

    http://www.npr.org/blogs/money/2013/10/10/230944425/everyone-the-u-s-government-owes-money-to-in-one-graph

    Who of that group do you think needs to have less financial wealth?

    Inflation is not a single number is the % change in the general price level (itself a ratio) and the total money spent. Savings cannot add to inflation. If the private sector is not going to create enough new money through debt expansion to maintain full employment (as we’ve seen since 1980, it cant) than maybe the Govt should provide the extra NFA’s. Inflation is a non-factor, its easily dealt with and the danger of runaway inflation in our open economy is greatly exaggerated. Who knows how large the trade deficit would get to absorb any extra NFAs the Govt decides to create.

  • Billiejones

    Do you consider Sweden Socialist? Their Gov’t Expenditures/GDP averages in the low to mid 40%’s…….not a far jump from where we are.

    As GWS points out the REAL fly in the ointment is the future projected expenditures and the trendline (what happens when all of those baby boomers begin drawing on entitlements and simultaneously stop adding to your GDP #?). You will have to assume some serious organic growth in order to believe that the trend for this ratio doesn’t plant us firmly in “socialist” territory in the next two decades (Using Swedish Gov’t Expenditure/GDP as the barometer).

  • Kristian Blom

    Please explain to me how how my “economic freedom” has steadily decreased?

  • Johnny Evers

    Seriously — you’re ignoring the question.
    As government expenditures continue to rise faster than government receipts, more borrowing will be required.
    At some point, as in Japan, the central bank will need to buy the debt.
    You are also assuming that new money created by debt will spur economic activity, when this has clearly broken down in the past decade, so that less economic activity is generated by each new dollar of debt.
    You are also ignoring that debt eventually has to be ‘paid for’ by increased economic activity.

  • Al Peinhardt

    The charts above are not the ones we are searching for. They’re misleading because they probably include state and local. Big brother may have some siblings, but they have to balance their budgets and so they’re pretty incidental. We are not taken in by your socialist mind charts.

    A more telling chart of creeping socialism would go back to the start. As it turns out, there is such a chart and it’s trending differently than the chart included in this piece (surprise, surprise, surprise).

    http://www.ritholtz.com/blog/2011/07/government-spending-as-a-percentage-of-gdp-2/

    You know they say. Numbers don’t lie, but…

  • Auburn Parks

    I am not ignoring the question. Your statement is just plain wrong. There will always be buyers for USTs because there is no where else for all those reserves created by Govt spending to go in the aggregate. They can’t get off the Fed’s balance sheet except as cash, and that’s irrelevant. So at the end of the day, either someone has to buy T-bonds that earn interest or those reserves sit there for someone earning no interest (in normal times).

    “You are also assuming that new money created by debt will spur economic activity,”

    Of course, debt is money. More money = more spending = more economic activity, ceterus paribus.

    “when this has clearly broken down in the past decade, so that less economic activity is generated by each new dollar of debt.”

    Only because of the private debt. As private debt reaches such a high % of GDP (reached 300% at the peak in 2008), so much income goes to servicing debt and not spent on goods and services, of course you are going to get a lower return on the growth in the money supply. Thats its my belief, why we should try and endeavor to keep private debt to GDP levels fairly constant over time, (thats for people much smarter than me to calculate).

    Govt debt shouldn’t even be included because the number of T-bonds is pretty much irrelevant. The Fed can always keep the interest rate below the growth rate.

  • drew

    that’s pretty much all politicians when it fits their narrative. Even Pelosi is on record saying her favorite word is “The Word”. The problem that most folks have with the Tea Party is they might actually mean what they say.

  • Auburn Parks

    Funny that you used a graph that stopped keep track at the peak back in 2010. Today, federal spending as a % of GDP is down to where it was on average in the 1980’s

    http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

    Not to mention the fact that top line nominal Federal Govt outlays have been essentially flat since 2009.

    Since 1965, the only two times that the nominal spending number has dropped has been from 2009 to 2010:

    3.517T to 3.456T

    And from 2011 to 2012

    3.603T to 3.537T

    Its amazing who you can get something so basic so wrong. It would be like you not being able to multiply 10 x 14 or something equally as simple.

  • Auburn Parks

    Yep, hence the everlasting desire to have a balanced budget and our current economic problems. If the NFA contribution by the Govt didn’t go negative during Clinton’s 2nd term down into the 1-2% range during W’s second term, we’d be looking alot better right now. Which of course in real terms means that the private domestic economy will continually lose NFAs to the foreign sector.

  • Suvy

    That’s a way to do it. Use the noise in the data to skew the numbers.

  • Suvy

    I do think the current account balances will correct in the next 2-3 years though. It just doesn’t make sense for the country with the highest living standards to be a net capital importer. The only reason we are is because of mercantilist nations overseas, which we can’t do anything about cuz we’re the reserve currency. Either way, all those countries will basically get smashed once China goes down and takes worldwide demand down with it. We’ve just gotta hang in until then.

  • Greg

    “It just doesn’t make sense for the country with the highest living standards to be a net capital importer”

    Ummmm I would argue thats what GIVES us the highest living standard. Think about it this way;

    Our living standard is what we make, how much we have to work to make it, how much free time we have to use it AND what we can get from other people that we dont have to make ourselves (and how cheaply we get that of course). So.. if we can work, make enough stuff to satisfy our needs and have money left over to buy what others produce that we dont… we have a high living standard.

    The more we can get others to produce for us (and our incomes can buy it plus what we produce) the HIGHER our living standard.

    If we got others to produce everything we consume (willingly not under slave conditions) and we had to produce nothing, that is the highest living standard possible (the lowest working standard maybe)

    So our position of being a net importer is proof we are living at a high standard………….. but maybe we dont realize it cuz we listen to the wrong economists

  • Auburn Parks

    Your reply makes no sense and you pretty much ignored everything that I wrote, congrats.

  • Paul W

    Apart from possibly a brief period when Ronald Reagan first came to power, governments in the US have all had socialist policies. Bush Junior was actually one of the worst until Obama came along.

    You must go back farther than 40 years otherwise you are comparing apples with apples rather than apples and oranges. Massive debt and profligacy really started with Lyndon Johnson and his Great Society.

    With the demographics of the baby boomers, it has been far too easy to spend money and buy votes. Both parties are the same. Socialist policies will continue until we hit a wall and the younger generation throws their hands up in disgust.

  • Auburn Parks

    Ding Ding Ding, you’re right on Greg. Even just today, “progressive” economist Dean Baker has a post out about how if we default it will eventually be good for us because it will ultimately allow us to shrink our trade deficit. Nonsense.

  • Greg

    Well like Auburn said below. Obama is guilty of none of what his de-rangers are accusing him of. He’s no socialist, he’s no Muslim (who the f^ck cares if he is anyway) and he’s not anti American. Thats 3 strikes. THATS derangement.

    What exactly have WE Tea Party de-rangers said that isnt true? We simply repeat their own ignorant mantras.

    Look, many Tea Party people are good well meaning folks ,I know many, but they are seriously deluded as to their vision of what America ever was, and where its headed now. Obamacare is FAR from socialized medicine, its almost 180 degrees form socialized medicine. Its the govt making you buy private insurance for health care. Socialized medicine is the govt paying for everyones health care. Thats just one obvious example. We dont need people with such an inaccurate understanding of things making policy.

  • Winston

    I though Socialism referred to state ownership of the means of production; the amount a government spends is not necessarily related to this.

  • Paul W

    Questions….

    Does GDP really matter? Does it really reflect the economy when it includes military and homeland security spending? How do you compare the US GDP with the GDP of a country with production but relatively little military spending?

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/07/everything-chuck-hagel-needs-to-know-about-the-defense-budget-in-charts/

    And finally, what is happening now and what will happen in the future are two different things. How will the US grow it’s way out of this?

    http://en.wikipedia.org/wiki/File:GAO_Slide.png

  • http://pragcap Michael Schofield

    There is no reason to let the facts get in the way, Winston.

  • Greg

    Interesting comment Tim

    I’d argue though that the military is the most socialist institution our country has.
    It has a guaranteed minimum wage, a maximum wage, very defined and stratified job descriptions, a central authority, it uses its power to fix prices for its “citizens”, universal health care, a retirement age and defined benefits (although that is changing some). So the more we put to the military model the more socialist we become.

    Tax and regulatory burdens may be moving the other way, but Id argue that they must. Corporations have all the profit and income, of course they will pay the taxes. Regulations? I tend to think we dont get any regulations that some big corporate player doesnt want. Why do we have regulations in Georgia now about selling draft beer in growlers?? The canned beer distributors want it. Those f^cking socialists!! Why do we have laws about how many solar panels we can put on our roofs…….. Georgia Power!! And this is in the heart of Tea hadist, freedom loving paradise.

  • http://orcamgroup.com Cullen Roche

    Shhhh. You’ll ruin it for the people who are convinced the USA is a socialist country.

  • Greg

    GWS

    Let me ask you something. Do you not see the flaw in taking growth rate of programs as percentages and extrapolating them? With that method every program that grows at all will “eventually” be 100%. Is it ever possible that SS and medicare will be 100% of our expenditures!? There is a limit to how much of ones income will be spent on health care. It cant be 100% since other things must be bought too. Im not arguing that we need to pay more necessarily, only that these projections of budget crashing doom are stupid. We will never spend 75% of our budget on healthcare and SS. I dont know where we will eventually land but it will not be where the doomsayers are fretting about.

  • Greg

    Default is not just about interest to foreigners or other domestic bondholders, its about breaking contractual monetary obligations. If you promise back in February to budget something at X and now say X-100 million you have defaulted on your obligation as much as Ive defaulted when I dont pay my Macys bill. In fact the first people to not be paid should be the bondholders, they did no work for it. Others have been working and waiting for pay.

  • Greg

    Right

    I work with pretty much a total Tea Party dept (maybe 4 of us arent) and about 2/3 have visited Europe the last 8 months. It is f^cking unbelievable to hear these morons when they return, just amazed at how nice things were , how easy it was to travel around on the PUBLIC transportation, how nice the roads were when they drove or BIKED. They have no clue how stupid they sound especially when criticizing those who want more of that here. Fools

  • http://www.fanbrowser.com/ Cowpoke

    Auburn, ya ever read the Tea Party Platform? I will do you a solid and give you the link here:
    http://www.teaparty-platform.com/

    Sure there are a few things to disagree with there about Monetary Policy and the way things work, but heck even among all circles of economics, folks still disagree. Krugmans wrong Cullens right, Mike Norman says this, Randal Wray, Bill Black, JKH, bernanke, Greenspan ectect It goes on and on with differing views So I hardly think it fair to castigate the Tea Party for their economic views.

    Also, I don’t see what’s so wrong with their platform on “Abide by the Constitution of the United States”

    Is that bad?
    OR
    Protect Free Markets
    Or
    Eliminate Excessive Taxes

    I think if you read their platform and talk to them instead of listening to MSNBC’s opinion you may just come to realize that they are not Racist, Homophobic, Xenophobic, Bigoted, Confederate, Suicide Bomber Arsonist with a Death Wish to Destroy America.

    Heck look at the ever “evolving” Democrat Platform:
    http://www.democrats.org/democratic-national-platform#america-works
    Can you spot any “Stupid Things” in there?

    I LOVE THE IRONY OF THIS ONE:
    “AMERICA WORKS WHEN EVERYONE PLAYS BY THE SAME RULES”

    But Yet, Unions, and Congress, and Business Get a Pass on the Healthcare mandate BUT NOT The Individual.

    AUBURN, I am LMAO even more now that I reread the dems platform.
    Thanks for the refresh.

  • wkevinw

    When you send money to the govt and they have control over your freedom, it’s a difference without a distinction. Hostage taking? Try dealing with a federal bureaucracy who has hold of your funding (because they passed a law to tax you)…

    Sorry to ruin the party.

    Do you read the constitution? The priority of individual rights over the collective/govt?

    See, in 1776 there was this government that didn’t have the true and legal right of taxation… due to the lack of representation..over this group of naive colonials…and there was this war…

    By the way, if you don’t think the US was the envy of a lot of the world between about 1790-today, you’re wrong. Was the US the “most powerful” country then? Nope, Did we have the healthiest population? Probably (I’ll let you Google it). The world elite knew the Americans had the most prosperity up and down the population, thus the emigration.

    fast forward a couple of hundred years…. it’s smelling similar to taxation without representation…including to my kids and grandkids

  • Auburn Parks

    Actually, thats not stated quite right above. The Great Depression started in 1929, post FRA of 1913 but before FDR took us off the gold standard in 1934. And this most recent Debt Deflation event only got so bad as The Great Recession, as it were. So there you have it. No major depressions on fiat money (granted 1946 to 1971 we were back on gold standard).

  • Geoff

    Cowpoke, if there were more Republicans like you, Washington wouldn’t be in such a mess.

    Respect.

  • wkevinw

    Yes, the GDP calculations are flawed as are so many. If you put govt spending as a positive to the GDP you get a nice result for the big government types: “Don’t shut down the government! It will harm GDP”. They are right by definition of the GDP, aren’t they…?

    Thanks for that GAO chart. I know of a pretty credible financial guy who says the issues have to be resolved by 2020 or there will be a big melt down out of the control of any government. It will probably bleed over into politics, like it is now.

    Maybe this one goes away, like Mondale’s admonition about having to raise taxes. He was right, but about 40 years early. Timing is everything.

    Midnight is getting closer.

    Meanwhile, I’ve been investing and doing quite well, thank you. No doomsday yet. We’ll see how that plays out.

    Confidence is waning. Believe it. (by the way, I have been buying equities recently, the very long term is not the short-intermediate term).

    People who do not want to commit to any budget discipline deserve little confidence. That’s what we have in the US Federal Govt. now.

  • Tim

    Nice find. They appear to have done another relevant analysis this past May. I haven’t read it yet, but here’s the link.

    http://www.heritage.org/research/reports/2013/05/red-tape-rising-regulation-in-obamas-first-term

  • Greg

    Cowpoke

    Platforms are platitudes. Many have a platform they cant possibly live up to. The Tea Party has a platform that sounds nice but………….

    Abide by the constitution of the US…… really? You think there is absolutely no room for disagreement there as to what the constitution means?

    Protect Free markets…. again really? What IS a free market? One which has no rules? How did we get a market for atomic energy? Did it just arise out of the ashes? What about the heroin market, marijuana?

    Eliminate excessive taxes. Wow… theres a clear objective. According to some ANY tax is theft and excessive.

    Sorry, as nice as these sound they have a long way to go in practice. And its when they get to brass tacks that you realize these guys dont know what they are talking about.

  • William Bedloe

    Do you not see the irony in your post? You are derisive and abusive of other Americans for their utter failure to comprehend the advantages of the European model, yet your romanticized view of things in Europe reveals your own bias. The trick would be to ask the Europeans if they are happy paying those astronomically high tax rates to ensure that those bike paths remain pretty for those ungrateful American “morons” as you call them. France may indeed be beautiful, but jobs are not plentiful, unions are all powerful there (and they can literally cripple the economy), tax rates are high and there is a movement back towards the political right there that is shocking even the pundits.

  • William Bedloe

    Wait – hasn’t this been one of the many arguments of the left – that economic freedom for most Americans has been steadily declining? Isn’t that why they want things like higher minimum wage requirements and extensions for unemployment benefits?

  • Auburn Parks

    Greg nutshelled what my response would have been perfectly. Besides, under no circumstance would I consider myself a Democrat under our current system of corruption, aka legalized bribery, ahem I mean campaign finance laws. They are just less bad then Republicans in my view.

  • http://www.fanbrowser.com/ Cowpoke

    Greg Or Auburn, would you be so kind to do me a favor and simply skim through the Democrat platform and pick apart their sound bites just as you did the Tea Parties and post them.

    I bet it would look the dang near the same.

    And as far as platform platitudes go, it’s looking more and more like Ideology instead.
    Remember, The Health Care TAX is the FIRST time in America You have to pay to be an American so political Platitudes can be costly.

    Are you paying your fair share?

  • Tim

    On the military, I would point out that, for FY2013, only about 26% of the DoD budget goes to personnel while 40% goes to operations/maintenance, 19% to procurement, 13% to RDT&E, and 2% for construction. The 26% for personnel does have a socialist structure to it like you pointed out, but that other 74% would seem to be more capitalist to me in that the military is a customer and a contractor is supplying a product or service. Maybe this portion of the DoD budget needs to be some hybrid or special case. I don’t know and I’m not sure what kind of monkey wrench this budget breakdown throws into your opinion. I’m kinda just spitballing here.

    On taxes, corporations don’t really pay taxes, though. At least not in the US, where individual taxes dominate over corporate taxes (47% individual income and 34% payroll versus 10% corporate). On regulation, I fully agree. That kind of regulation situation is definitely not capitalist since it’s not competition in the game so much as buying the referee or rules committee. Both the taxes and regulation can show cronyism at its worst and slowing, much less reversing, such a trend would be extremely difficult.

    DoD numbers:

    http://www.google.com/#q=us+military+spending+breakdown&biv=i%7C0%3Bd%7Cn9MiuFEW0Ns9pM%3A

    Taxes:

    http://www.google.com/#q=us+tax+revenue+breakdown+2012&biv=i%7C0%3Bd%7CkQH5Tg0t2rm-2M%3A

  • http://www.fanbrowser.com/ Cowpoke

    Greg from that, I take it your not afraid to invest your money in the Coal Industry then correct?
    :)

  • rp1

    If the Bernanke put isn’t socialism, I don’t know what is.

  • http://www.fanbrowser.com/ Cowpoke
  • Greg

    William

    You accuse me of something I did not do. I didnt romanticize Europe. Would I like better public transportation? Yes. Its stupid the car dependence weve built in to our lifestyles. My colleagues were the ones who thought this was all so great and raved about it for weeks, they comprehended the better outcome without realizing how it got there and how they could get it. They decry The Europe model but then love Europe when they see it??!! Hmmm hows that work? Once they see what they get they actually like it. So either they are stupid (theres something I like, that is good, that I can afford but wont pay for?????) or obstinate. Either way they should not be commended.

    So French unions can literally take down the economy? Really? When has it happened? Tea party politicians have been taking it down for about 5 years now.

  • http://www.fanbrowser.com/ Cowpoke

    Winston, in a nutshell America is Corporatism not Socialism plain and simple:
    http://en.wikipedia.org/wiki/Corporatism

  • Hans

    AP, no different if a went weekly and rob my dear neighbors..

  • Suvy

    No, I didn’t. When a country like runs massive current account surplus(China), it does so by intervening in the FX market. Some other country has to run that corresponding deficit. In this case, it’s the country with the most sophisticated financial system. Remember that Y=C+I+NX where C=Gc+Pc and I=Gi+Pi(I know I’m defining it differently). So when one country intervenes in the FX market to make its goods more competitive, the country running the corresponding deficit must have an unsustainable increase in debt just to keep GDP stable. This goes on until debt capacity constraints are hit.

    The real problems in this financial crisis–like all other financial crises in the past–are international. These issues can’t be fixed by domestic policies alone.

  • http://www.fanbrowser.com/ Cowpoke

    Err Uh Greg, perhaps you should pull foot outa mouth because Bill just school’d ya.
    He called you out and correctly so.
    Hell look here:
    French union strike shuts down Eiffel Tower
    http://www.france24.com/en/20130625-french-cgt-union-strike-shuts-down-eiffel-tower

    DOH!!!

  • Hans

    Your lifetime membership to the NAACP is now in the mail…Thanks bro!

  • Auburn Parks

    Yeah, but you are ignoring the reality. The amount of T-bonds is not that important. So while obviously, there are real limits to the amount of private debt = money growth the economy can carry as a % of GDP and still sustain real growth.

    There is no such concern with T-bonds. For all practical purposes, there are no debt capacity constraints for the federal Govt. Thats why your analysis is incomplete. You mistakenly conflate private debt with Govt T-bonds, which are functionally similar to bank deposits and not at all comparable to a mortgage. It doesn’t matter what the trade deficit is, the Federal Govt can always afford to buy all the unemployed labor. Whether you do that through tax cuts, or jobs programs I dont have a personal preference.

  • http://www.fanbrowser.com/ Cowpoke

    Give him a SAG membership as well for that perfect B.S. performance.

  • Auburn Parks

    Why I’m sure its just a bunch of meaningless political statements. I’m simple,

    Much bigger deficits.
    ~5% of GDP on R & D plus infrastructure
    No corporate taxes
    Start with a complete suspension of FICA until, if ever, its necessary to raise it to fight inflation.
    Maintain optimum stable private debt to GDP levels
    2X poverty retirement income for all Americans
    Healthcare for everyone
    jobs programs to mop up any unemployed.

    The Dems disagree with just about all of that.

  • http://pragcap Michael Schofield

    Normally I don’t respond to such seemingly flawed logic but this is exceptional. Had it not been for govt spending in this recession deficits would be more not less. What do you think supported profits? Cmon figure it out….You know a guy who can predict 2020. Bullshit. But people like you could crash us now….Mondale was a douche, I have to give you that….Midnight? You mean that crap your kind is engineering now….You’re doing quite well. It’s a bull market, everybody’s doing well. Stock picking geniuses are a dime a dozen….Confidence is waning. No kidding. People who think like you are at the core of that clown show….I assume you must mean the discipline to pay the bills? US debt shall not be questioned. I’ll bet you ignore the parts of the constitution you don’t like.

  • Auburn Parks

    That makes no sense at all. If youre referring to inflation or taxes as stealing from your neighbors, then that just show you understand neither.

  • DanH

    Why would a membership to the naacp be bad? Are you another ignorant tea party member?

  • Hans

    Of course, AP, you have been well trained to accept the conventional norms…

    Look at the per capita spending and it will blow your and Barney Franks underwear off..

  • DanH

    The USA is a constitutional republic. Cullen wrote about this the other day. In other words – we have the exact government our representatives were elected to run. You seem like another misinformed tea bagger.

  • Hans

    Yes, indeed, Cowpoke!

  • http://www.fanbrowser.com/ Cowpoke

    Auburn, you kinda miss the point.
    Have you ever been in a position where you were on an outing with someone and they were ordering the Lobster while you were ordering the Chicken because you could not afford the Lobster?

    See, The US govt spending creates the atmosphere where unlimited spending is OK. Sure it may be for them but the overall atmosphere it creates socially can not be good because people simply do not have the save type balance sheet authority.
    This alone has to cause it’s own distortion in the mkts.
    Hell did you see the walmart video?
    http://hotair.com/archives/2013/10/14/video-ebt-glitch-sparks-run-on-walmart-shelves-in-louisiana/
    That was a Full Blown Govt Involvement into Human nature and it ended BAD for capitalism. and self governing.

  • DanH

    Cullen, the diversity of your readership is a testament to the attractiveness of your message, but you have a lot of teaching yet to do.

  • http://pragcap Michael Schofield

    The truth can be ugly. Find a flaw.

  • Hans

    Dan, does the “H” stand for hate? Or are you an employed Occupier?

  • Hans

    DanH, why not take your slurs and go elsewhere….

    You would make a good fit at the Economist’s View, with the rest of the leftwing haters…

  • http://pragcap Michael Schofield

    The purpose of socialism is to benefit the proletariat…This seems to have benefitted the wealthy. Nice try but you’re all wet.

  • http://pragcap Michael Schofield

    I have completed a study of the comments in this section and my conclusion is that, no, we can’t get past the socialism nonsense. Next question please.

  • Gmason

    We’ll just call it collectivism then, and if there is anything the 20th century taught us, it is that collectivism kills.

  • DanH

    You implied membership to the NAACP was a bad thing and I am the hater? You’re a racist. Is there really anything worse in the world than that? The tea baggers are out waving their confederate flags like it’s 1865 again. Are you all that backwards?

  • billiejones

    completely agree.

  • billiejones

    seems you completely missed the point of GWS’ comment. He is arguing that the projected trend line for entitlement programs exceeds that of GDP. Its a pretty fair assumption. I haven’t seen anybody argue differently…..even the entitlement programs themselves point this out in their literature. If you have an argument that the costs of entitlement DONT step up significantly as baby boomers retire and begin drawing benefits then i would love to hear it.

  • http://www.fanbrowser.com/ Cowpoke

    Dan H here is why:
    John F. Kennedy was assassinated by a Communist. He did not die because reactionary nativists and plutocrats hated him. He did not die because arch-segregationists hated him. He died—if it can be said he died for any reason beyond getting in the sights of a misfit ex-marine—because Fidel Castro hated him.
    http://www.chicagoreader.com/Bleader/archives/2013/10/11/george-wills-interesting-idea-of-what-made-liberalism-go-bad
    Educate yourself in in reality bro, not the DNC talking points.

  • DanH

    Stop it. You’re embarrassing yourself.

    “This is a good-will, people-to-people mission that seeks to build bridges with the people of Cuba.”

    Talking to Communists doesn’t make a civil rights organization bad. You can’t possibly be that dense, can you?

  • http://www.fanbrowser.com/ Cowpoke

    I may be wet but I just schooled your nappy arse big mama self whos BIG mama ask for a checklist instead of a menu self.(snap..snap)..

    QUOTE:

    “Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralisation of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?”

    Go On with IT EINSTEIN!!! HAHAHAHA.

  • Suvy

    What you don’t recognize are the nonlinear effects of high public debts. You get stuck in feedback loops. We all know that governments have no limit to how high debts can be, but there are consequences to debts being very high. It creates risks that will blow up because it’s effectively volatility suppression.

  • http://www.fanbrowser.com/ Cowpoke

    Thanks for your feigned concern of self deprecation but I don’t need it as I have facts and reason on my side.
    Nice try though:

    http://www.humanevents.com/2010/08/02/top-10-examples-of-naacp-racism/

  • Hans

    Cowpoke, from the Frenchy labor gangs to the Tea Party, it sounds like a great novel…

  • DanH

    Using your logic, I can just cite a few examples of Republicans or Tea Party Idiots being racist and write-off the entire movement. But I won’t do that because it’s not even necessary. The Tea Party represents the 200 year old views of white racist America. They are the very worst of American politics. I’d rather see a Communist run this country than a group of racist bigots with 200 year old views.

  • Hans
  • Hans

    Mr Cancellieri, I concur as indicated by the last decade of GNP growth…

  • Hans

    Cato, studies indicate at least a 10% drag on the general economy, not including the government sector of course..

  • http://www.fanbrowser.com/ Cowpoke

    Haha, perhaps JK Rowling could play middle magistrate and write it.
    :)

  • Hans

    That is what I said watching Survivors the other day…

  • DanH

    Since there seem to be quite a few Tea Baggers here I was wondering if one of you could explain how anyone with a brain can support these 15 core beliefs of the party:

    1. Illegal aliens are here illegally.

    Um, many of our ancestors were technically illegals. What ever happened to “give us your poor, your hungry?”

    2. Pro-domestic employment is indispensable.

    Yeah, people need jobs and capitalists, by definition, don’t provide all the jobs necessary to hit full employment. Your free market utopia is a myth.

    3. A strong military is essential.

    When is enough enough? Do we need a base in every country?

    4. Special interests must be eliminated.

    Duh.

    5. Gun ownership is sacred.

    No, gun ownership was part of the Constitution because back in 1776 a gun might actually help you fight off a government insurgency. If you think a gun is going to help protect you from government today then you’re losing your mind. If you actually think our government is going to attack us then you should probably just stay inside by yourself. Forever.

    6. Government must be downsized.

    What? Back to the same size it was under Ronald Reagan when we spent 34% of GDP?

    7. The national budget must be balanced.

    With a current account deficit this would drain net financial assets from the private sector. The Tea Party doesn’t understand sectoral balances and how damaging this would be for the US economy.

    8. Deficit spending must end.

    See above.

    9. Bailout and stimulus plans are illegal.

    You want a capitalist banking system and private corporations, but you don’t understand how private banks require government support. Again, you’re just clueless.

    10. Reducing personal income taxes is a must.

    Yeah, more tax cuts for the rich. That’s worked great.

    11. Reducing business income taxes is mandatory.

    Yeah, because corporations don’t have enough cash with their record cash levels and record profits.

    12. Political offices must be available to average citizens.

    Who do you think runs for political office? Aliens?

    13. Intrusive government must be stopped.

    Yes, we need a strong military, but not a military that defends us from domestic terrorists.

    14. English as our core language is required.

    English is the core language. But we’ve always accepted other languages like Italians, Spanish and even the African Americans your ancestors brought here against their will. You don’t want anyone to infringe on your heritage, but you have no problem ignoring everyone else’s.

    15. Traditional family values are encouraged.

    Just say it – you are pro-life, you think the world is 6,000 years old, the bible is your guide to everything, you don’t believe in evolution, etc.

    Did I miss anything?

  • http://www.fanbrowser.com/ Cowpoke

    Thanks DanH, you just exposed yourself for the disingenuous debater you are by your race hustling tactics you are implying.. You hide behind topics like these to try and flame people who differ on subject matter.
    You are a Child that is lacking in subject fact so you resort to pathetic and I might add EVIL personal attacks of “The day” political ammo of using the historical plight of years gone by human tragedy to try and garner your pathetic weak feeble minded attempt at scoring a cheap political point on a web site.
    Be gone you inane twit for you have exposed your idiocy…. Now go change your name and come back and try again.

  • Hans

    Harvey, was indeed a Communist, something that eludes the left; but then history does in general…

  • http://www.fanbrowser.com/ Cowpoke

    How bout we Just Tea Bag Dan?
    hahahhaha

  • Hans

    Ding, ding, ding, how correcteo you are Paul Wise!

    I believe history will show the high mark of the Socialist movement in America with BarrockOcare…

    BTW, why was he not the first to sign up on one of his controlled networks?

  • Hans
  • Hans

    Ivan, can France buy back the Statue of Liberty, it will help fund the federal nanny for an hour or two…

  • Hans

    Cowpoke, you are a RACIST! Just preempting the dude…

  • http://pragcap Michael Schofield

    Well done Dan!

  • http://pragcap Michael Schofield

    That’s some of the stupidest shit I ever heard Cowpoke. You really are embarrassing yourself.

  • Hans

    Tom Klan-cy, would endorse this fictional writing…Your cry of racialism is simply a working platform, designed as a means of offensive action when facts and figures are purely absent…

    The narrative you provide is simply an editorial, a very bad at that, which attempts to justify your incriminating charges. It is the talking points provided by your friends; political actions groups (non-profits funded with taxpayer money), NAACP (why are they still using the word “colored”?), Demco Party, La Raza, Rev Sharpton, The Most Rev Jackson, and the federal nanny state…

    When Conservatives do present “brown people” they are attacked as Uncle Toms or as Quislings (by their race) by their opponents…This is nothing less than Reverse racism or as I call it, one eighty racism…

    Your words are distortions of the truth or worse LIES…As the Nazis said (JG) tell a lie enough and sooner or later the folks will believe it…

    I seriously doubt you will be able to muster any credible evidence, unless it is lifted from the National Inquirer…

    The charge of Racism is so common place, it has lost any of it’s original meaning…

  • Hans

    Yes, just down right common sense…

  • Hans

    Is it possible to use this metric as a measurement?

    In five days, we will fundamentally transform America. – BOCO

  • Hans

    Fifteen items and not a single agreement!? This will not move US FORWARD.

  • Hans
  • Hans

    Please do but I doubt you will or can…

  • Hans

    http://www.americanthinker.com/2013/09/europe_declares_the_welfare_state_dead.html

    “Economists define a nation to be a welfare state when 20% or more of its gross domestic product (GDP) is spent by the state on welfare and education. The United States has never hit that level, but welfare and education “investment” spending under President Barack Obama rose to 19.4% of GDP in 2012. Implementing Obamacare will convert America into a welfare state for the first time in our history.”

  • JK

    Auburn Parks,

    I find myself agreeing with most of what you say, but something you just said seems baseless:

    “If the NFA contribution by the Govt didn’t go negative during Clinton’s 2nd term down into the 1-2% range during W’s second term, we’d be looking alot better right now.”

    Maybe there would not have been that small recession at the beginning of Bush 2, but even that’s debatable since there was a dotcom bubble.

    Are you suggesting that if it weren’t for the ‘Clinton Surplus’ then we might have never had a housing bubble?

    We could actually be in worse shape today without the post-Clinton Surplus recession. Imagine that the dotcom bubble never popped, but instead continued onward and got wound up with the housing bubble… and they burst together at the same time in 2008. This is useless speculation though.

    I still think your claim above that I quoted seems baseless.

  • hangemhi

    Education is welfare? What nonsense. And how about when mommy and daddy buy your education for you, what’s that called? And your source? Not biased at all. LOL.

  • Stephen

    Actually the US is a failed capitalist state if it is anything ,hence the skew in wealth. Let’s bear in mind capitalism is supposed to lead to an equitable share out of the gains of productivity that results in all contributor parties remaining motivated for the system to continue to serve them in the future. When “socialist” issues arise it is because the capitalist system has failed some of those contributors to such a degree that there are sufficient of them that they do have political power to to go about offsetting those failures.
    Look for why wealth has skewed and correct that then you won’t have to argue the toss about concepts that worry people because they don’t really understand them.

  • Tom C

    Transitioning to fascism / social statism ….it takes time.

  • Tom C

    The central state has become ‘mommy and daddy’? pathetic.

  • Johnny Evers

    Bingo.
    Once you make the state your god, very bad things happen.

  • Suvy

    And you don’t understand the problems with government debt. We all know there’s no limit to the amount of money the government can create and that the federal government can’t run out of money. That’s not the real argument. The real argument is what happens when we begin to actually do that? How do external shocks affect us? What happens in the FX market? So on and so forth.

  • Very Serious Sam

    We will very soon see if the USA becomes even a failed state, w/o the ‘socialist’ part, thanks to the incredible things happening in congress and senate.

  • Nils

    I sincerely believe that you can’t teach people anything. They either learn or they don’t.

  • joe

    LOL, you’d have go a lot farther back than those presidents to make your point. probably well before FDR, the american father of socialism. and even reagan had a democratic house to deal with, and a moderate senate. try looking at tax rates also.

  • joe

    really? what is medicare, social security, and obamacare?

  • Nils

    I’ve actually met quite a few socialists and communists, and they even called themselves that. It’s quite different from what is referred to as socialism in your country.

  • John

    Is this the Goebbels version of GDP you are using? Because everyone knows that its very hard to pin down Goebbels GDP numbers, they morph when needed to back-fit some data.

    You would think that a capitalist society would be able to sort out the winners and losers in a free market type system, but apparently that’s not what we have here.

    You would think that the cost of monies would be determined by a free market system of supply and demand, but thats not exactly what we have here.

    What we have is some sort of centrally planned economy and thus society. Maybe if you don’t like the term socialist, you should create a new word to describe what we have. Maybe you could call it an MMR society. A new sort of government run by people against goodness and normalcy.

  • Odie

    “I do think the current account balances will correct in the next 2-3 years though.” For what reason?? The US has had a trade deficit for the last 3 decades. Given the still pretty abysmal state of our manufacturing sector I do not see how we can produce even the goods you would like to export. And who is supposed to buy them? Or are you suggesting we have such a drop in living standard that we reduce our imports drastically?
    If China goes down I anticipate we will actually import more from them since their labor will be even cheaper than it is now. And if we start another global recession then the trade balance will be our least worry.

  • Nils

    Really, John? You really had to go there?

  • Nils

    Obamacare is a nice gift to private healthcare.

  • Suvy

    The main reason we have a trade deficit is because there’s some mercantilist nation that wants to run a surplus and is turbocharging growth to do so. Since the whole point of mercantilism is to import foreign demand, it works great during the upstage of any credit cycle or globalization cycle. When the world enters a global deleveraging, all of those same mercantilist countries will have major trouble. Once worldwide demand really begins to take a hit (when China slows down), the current account balances will reverse themselves.

  • Suvy

    We all know that the federal government can’t “run out of money”. That’s not the argument. The problem is what happens when you begin to test those limits. Stop using arguments like that when someone says that spending might be too high or that government debt might be a problem because you’re just stating the obvious.

  • InvetorX

    “Look for why wealth has skewed and correct that”

    And what was the reason for skewed wealth?

  • InvetorX

    Cullen,

    by using Federal, State and Local spending I get a peak of 42% of GDP, not 39% like your chat shows. What is your definition of spending?

  • Hans

    Joe, the first two are paid for…

  • Odie

    “Also, I don’t see what’s so wrong with their platform on “Abide by the Constitution of the United States” Is that bad?”
    Why is a document written more than 200 years ago by some well-off, caucasian men always taken as the ultimate truth? Granted, it has held up pretty well over the centuries and I tend to agree with most of it but it does not mean that there is no room for improvement. Our society has changed and in quite a few parts for the better. The constitution should reflect that. Not to mention that abiding to the constitution is open to various interpretations as the Supreme Court shows.

    “OR Protect Free Markets”
    That is mixing up means and goals. Ultimately, a democracy needs to ensure the safety and well-being of its citizens. Free markets have been a great tool in achieving that goal but by far they are not the only option and can also be counterproductive.

    “Or Eliminate Excessive Taxes”
    What a vague term and actually contradictory to their whining about the budget deficit. I am sure if you ask them they would not even know that one of the main goals of taxes is to control inflation.

  • Hans

    Cowpoke, nice link…I did not know that the White Mansion had so much to do with regulations…

  • John

    Sorry, which part? The Dragnet issue? Just parting some sarcasm into an otherwise endless circular debate on economics and what to call a hybrid money for nothing society where the banker is paid more than the skilled laborer. Unfortunately if the proverbial shit ever hit the fan, the first and most useless member of society is the one who knows only how to manipulate the flow of monies. Any reference to biblical tales are nothing more than coincidence as times have surely changed?

  • jhs

    Politicians are too dependent on large corporations and the Fed’s policies are causing further wealth inequality.

  • http://www.theartofmarkets.com marketfowl

    Excellent satire John. You could have included slavery still going strong without Goebbels government intervention.

  • Greg

    The main point is, regardless of what percentage of the militaries budget is personnel its a “planned economy” type institution. Just cuz they pay private corporations to make the stuff they buy doesnt change that. Russia did that too during their heyday. It is central planning to the nth degree.

    Im not deriding that at all. My dad was military. I think we could do a lot of good via our military, as long as we keep the neocon chickenhawks like former pres, Cheney away from it

    The military is very pragmatic. They want what works and they really dont put up with much BS. They are looking big into alternative technologies cuz its smart and they take global climate change seriously cuz they will suffer if they dont and they know it.

    So really Id like to see the military model expanded to a large degree, not to blow up more brown people, not to increase security per se, but to admit that we need planning for the outcomes we desire and we dont just sit back and go wherever
    greed takes us.

  • Greg

    I have zero interest in the coal industry

  • Greg

    “He is arguing that the projected trend line for entitlement programs exceeds that of GDP”

    Which is impossible. What your saying is “we might someday spend more on entitlements than is spent in total”???

    Thats nonsense, and its why these projections are just scare tactics

    What if I said

    Based on the price change of wheat the last 12 months by 2055 we will be paying 5500$ for a bag of flour. And at the rate wages have fallen we will only be making 0.04$/hr HOW WILL WE AFFORD THE FLOUR!!!

    You cant take some prior rate of change of one variable and apply it to infinfity without applying the rate to other dependent variables

  • Greg

    “perhaps you should pull foot outa mouth because Bill just school’d ya”

    Cowpoke spikes the ball on the 25 yard line….ooops!

    The unions closing down the Eiffel tower is equivalent to crippling the French economy? Interesting. So I guess the TP repubs forcing the spending cuts which closed national parks and stopped White House tours…. those must be waaayy worse.

    The austerity crowd has done more harm to jobs and potential world GDP growth the last 5+ years then unions have done in their entire history.

  • Hans

    wel·fare Noun /ˈwelˌfe(ə)r/

    Synonyms:
    noun: well-being, prosperity, weal, good
    The health, happiness, and fortunes of a person or group
    they don’t give a damn about the welfare of their families
    Statutory procedure or social effort designed to promote the basic physical and material well-being of people in need
    the protection of rights to education, housing, and welfare
    Financial support given for this purpose

    I would define any budget item that provides a monetary exchange, with a lack of payment or compensation is deemed as welfare…

    Remember, your side always complains about corporate welfare..

  • John

    HHmm… and I always thought government intervention created slavery in the first place. It must have been that whole ” all men are created equal” phrase that threw me off course. Oh wait, they changed that logic to ” all free men are created equal.” That solved that whole pesky, dude in my backyard working for beatings and meat. Now they can re-intervene their intervene to act as though their intervention created an environment where ” all men are created equal.”

    I will have to reverse engineer all logic now to come up with a substitute for common sense. Maybe we can call this solution “economics” or the Government Sponsored Logic Assistance Program, GSLAP for short.

    Anything but common sense as that would not allow for the guise of intervention.

    If you pull the strings off, its not much of a puppet show.

  • Hans

    You are correct, X!

  • Greg

    The movement to the political right is the same as the US movement to the right. Its not driven by what the people want but what the politicians/bankers want.

    Overwhelmingly Americans want to preserve and enhance SS/Medicare but in spite of that the politicians forge ahead with “Needed cuts”. Europe had decades of building this nice system that people like now the plutocrats want to sell it off to investors and turn around and charge the people for it and the crisis is the excuse the govts use to raise money. Europes monetary union was a conservative idea and it is failing the people…. other than banker people.

    The political moving isnt through in Europe or here my friend. It may just be starting…… and it may not look good for your team in the end. Although you guys will always resort to law and order tactics when you have to. We’ll see when the people call BS on it.

  • Hans

    Ouch, you mess with the bull and you get the horn!

  • http://orcamgroup.com Cullen Roche

    This whole debate about capitalism vs socialism can be pretty easily summarized if you understand the inherent nature of a capitalist system.

    The USA has an overwhelmingly capitalist system. The vast majority of the means of production are owned by private entities. That shouldn’t be controversial.

    Capitalists, by their very nature, are profit hoarders and monopolists. In other words, if you hadn’t stopped Rockefeller and Vanderbilt and JP Morgan and Carnegie back in the 1900’s their firms would have eventually battled it out for the super conglomerate that WAS corporate America. That’s what capitalists do. They monopolize profits. And this means the capitalist system veers towards corporate control. This shouldn’t be controversial either.

    There’s a HUGE amount of good that comes from a capitalist system. Especially when the capitalists are good people. But that’s not always the case. Most of the capitalists just want to expand the bottom line and enrich the owners. After all, that’s the basic point of the business they run. Unfortunately, this means problems for a lot of other people. It means wages get suppressed. It means retirement plans get underfunded. It means a lot of people get left unemployed.

    So, what to do with those problems? Some people want to let the capitalists just control everything and get the govt out of the system. Others want the govt to control more things and reduce reliance on the capitalists. I think the most pragmatic approach is some blend. By understanding the inherent fragility and weakness of a capitalist system we can actually use the govt to make it stronger by providing some of the things that capitalists won’t ever provide. That makes our standard of living better in both a financial sense and a social sense.

    There’s balance to be found here. We don’t need to veer towards socialism or pure capitalism. The world is not black or white or red or blue like so many seem to think.

  • Greg

    Good question Bill, so Ill answer for Mr Blom ( correct me if I mis speak for you Kristian)

    Mr Cancellini was just parroting the tired line of the plutocrats and their ignorant footsoldiers, that our socialist govt is taking away all our freedom. And of course Obamacare (the largest gift to a private industry ever…. maybe) is supposedly exhibit A. Thing is, the manner in which Obamacare limits our freedoms is by MAKING us beholden to the blood sucking health insurance industry. If it actually went more socialist ( as many businessmen are NOW calling for) and went single payer, many of us would be free from “disease ransom”. That condition we sometimes get when our DNA predisposes us to something like cancer which we then are required to sell everything we own in order to get treated for, cuz some shareholders in Pfizer need to get paid. That would be true freedom

    So I agree that our (working people with less then 6 figure salaries) freedom has declined but it is due not to too much socialism for the poor, but too much socialism/crony capitalism for the rich.

  • Adam2

    20% is a made up number. Who are these economists?

  • Adam2

    Why this place is called Pragmatic Capitalism!

  • Greg

    Agree Cowpoke

    Nice to see we can agree on something ; )

    And corporatism is very close to fascism when they buy the state.

  • Greg

    Outstanding comment Cullen. Now it comes down to the policy prescriptions

    I hope you plan on saying something similar to this while your in South Carolina.
    Those people need to hear something like this. Hell everyone needs to hear something like this

  • jhs

    What’s your take on capitalism when governments need to bail out corporations?
    Capitalism means, in my opinion, that companies that perform well flourish while companies that don’t go bust. No government intervention needed since there will be other new companies that will do better than the rotten bankrupt ones.
    I don’t think companies should rule the government or public entities either; chances of getting corruption are too big.

  • Nils

    Well it all depends on your definition of “men”.

  • Johnny Evers

    The word socialism gets people riled up, so maybe it’s just better to say that government is playing a bigger role in economic life than ever before.
    It basically owns the mortgage market, it is taking on an even bigger role in health care, it has more and more regulations and laws that restrict economic activity, it spends more, it taxes more.

  • http://brown-blog-5.blogspot.com Tom Brown

    ” it taxes more.”

    More than what? The US in the 1950s?

  • SS

    Of course the government is more involved. You don’t grow a country from a few million people to 300 million people and expect the government to shrink. Some of you libertarians seem to have this deluded notion that the government should get less involved as our world becomes increasingly complex.

    Also, if you want to start shrinking the tax needs of the country then let’s start worrying about the size of our military more and less about taking care of old people. You guys have your priorities exactly backwards.

  • David Brown

    Misleading inasmuch as it does not address the vast increase in regulatory costs. THe sub-prime debacle caused by community reinvestment regulations, the energy costs arising from rules affecting coal fueled generating stations, bans on oil well exploration etc. aren’t included in the % of GDP above.

  • Johnny Evers

    More every year, when you count federal, state, local, property taxes, payroll taxes, sales taxes, licenses, fees.

  • Greg

    “Greg Or Auburn, would you be so kind to do me a favor and simply skim through the Democrat platform and pick apart their sound bites just as you did the Tea Parties and post them.

    I bet it would look the dang near the same.”

    Oh is this all in the name of fairness or something? ; )

    Look, I am quite sure the democratic platform is as substanceless as anyone elses. And frankly Im no Democrat. I voted for democrats in most election the last decade or so (Voted for McCain in our primary in 2000) but I have zero allegiance to “the party”. Calling democrats socialist is such a joke, they have been up Wall Sts ass as much as anyone through history (Its been said Democrats like to spend and Wall St likes to collect or something to that affect)

    One problem is the Tea Party really believes the things in its platform are literally true and that thats ALL you have to do. Its like their version of religion, just believe the right things hard enough and you will be ok.

  • http://highgreely.com John Daschbach

    Socialism is when the government owns the means of production, determines what will be produced, and generally directly pays the workers. We have this only in limited places in the US. The Military is the largest Socialist organization we have, but even here a large fraction of the production is privately owned and only paid indirectly by the government (e.g. Lockeed Martin). Military health care is more Socialist than any other segment, as the government owns the majority of the capital facilities and directly employs a segment of the workforce.

    The majority of what the wackos call Socialism are flows of funds with little or no direct involvement of government in decisions regarding means of production, goods purchased, or any other economic factor.

    The government does seek to make spending decisions in a small sector of the economy, the discretionary spending portion of the budget. For instance, almost all basic scientific research in the US is Federal spending, although the majority of scientists and staff work for contractors. The government does set broad research targets in some areas (basic physics, chemistry, mathematics, molecular biology, …) and tighter ones in other areas (detection of IED’s, radiation monitoring of container cargo, …)

    Even if we had didn’t have the lowest real levels of Social Welfare spending in the developed Western world it would have nothing to do with Socialism.

    Discretionary spending by the Government has come down more (and faster) under Obama than any President in history (defined as when we have data, ca. after 1940) and is now at the lowest level compared with GDP ever, and it’s still declining.

    It’s funny, the wacko world doesn’t care about reality and real data. They ignorantly call Obama a Socialist, when in fact in the only areas which are truly, or partially Socialist, Obama has presided over the greatest decrease in history, and will leave office with the least Socialist government in over 75 years. But people who live by absorbing the propaganda machine will still believe otherwise.

  • p fitzimon

    If the government were using tax dollars to purchase private business I would be concerned about socialism. But the U.S government returns tax dollars back to the private sector by spending or re-distribution (welfare). Meanwhile corporate profits have been at an all time high and the level of income has increasingly moved in favor of capital not labor.

  • Billiejones

    Greg,

    NO. The TREND line of entitlements exceeds the TREND line of GDP. Or if you prefer, the TREND line of entitlements has a steeper slope.

    In other words the growth RATE of gov’t expenditures exceeds the growth RATE of GDP…..to be very clear i will yet again……it is an undisputed fact that given entitlement projections this expense will take up a SIGNIFICANTLY larger percentage of gov’t expenditures. No doubt your rebuttal will be that expenses can be reshuffled…….which will only further reveal that you havent actually looked at any of this. BTW, the rate im referencing re: entitlement spending isnt some ridiculous constant that can be uniformly applied to all other variables (i.e.: GDP)….it is a unique rate that is a factor of demographics.

    Reading Comprehension appears to be a weak point of yours as evidenced by you inability to understand the points of several other posters here…..Auburn, Cowpoke et al. Perhaps you should slow down…..its tedious having to backtrack and point out your errors.

  • Greg

    “NO. The TREND line of entitlements exceeds the TREND line of GDP. Or if you prefer, the TREND line of entitlements has a steeper slope.”

    Here is what I wrote;

    “He is arguing that the projected trend line for entitlement programs exceeds that of GDP”

    The second ‘That” means the trend line. You simply rephrased exactly what I wrote and my point stands.

    Worrying that the growth of entitlements will continue on this trend and GDP on its trend leads one to worry that Entitlement spending might actually pass GDP or even reach GDP……. both are impossibilities.

    One reason is entitlement spending adds to GDP in and of itself second so GDP will grow with growth in entitlement spending (not dollar for dollar surely)

    BTW Im not arguing for unlimited entitlement spending (Although it could be greater with no harm) but the arguments made to scare us into cutting it are specious.

    To be clear

    WE WILL NEVER REACH A POINT WHERE ENTITLEMENT SPENDING IS 100% of GDP REGARDLESS OF THE MEASURES TAKEN OR NOT TAKEN NOW, and that is exactly the picture the scare mongers are trying to plant “At the current rate entitlements will eventually eat up the entire federal budget”!!!!

    It wont reach 70% ever… or even 50%

  • midas2

    I don’t think capitalism is “supposed to lead to an equitable share of the gains in productivity”. Capitalism is a method of group financing by investing in means of production. The aim is solely to gain profit. As to sharing, it is should be proportional to investment. I don’t know if that is what you mean be equitable, unless you feel employees payment should be related to that level of profit. Salaries are normally not part of a theory of capitalism. After all, one can have slaves and still engage in capitalism. A capitalist system is not based on a question of morality. Socialism does make that claim.

  • midas2

    Thanks, Cullen for a clear statement, in all this loose talk.

  • Joe in Accounting

    I’m definitely lol’ing as the kids say at the CRA comment. Try actually reading the CRA for yourself. Subprime anything doesn’t even count towards CRA credit for banks. Let’s retire that talking point. Next.

  • Billiejones

    This is getting ridiculous, im not sure if you are playing stupid or if you truly make this many mistakes…..

    “He is arguing that the projected trend line for entitlement programs exceeds that of GDP”

    – This was my quote…it was in your above comment only because you were attempting to reference the comment i made directly above. As an example i will use the same technique and reference a statement made by you (this actually is your quote)……this is getting very tedious BTW.

    Greg said:

    “…leads one to worry that Entitlement spending might actually pass GDP or even reach GDP……. both are impossibilities.

    – Nobody said that entitlement spending was going to eclipse GDP….you are tilting at imaginary windmills and showing your ignorance in the process. I don’t want to be mean but this further shows your comprehension difficulties. GWS said that the TREND of entitlement exceeds that of GDP….in other words the RATE of growth exceeds that of GDP. Somehow you decided to argue a point that was never made; that entitlement spending won’t ever ECLIPSE GDP……..which is retarded.

    “WE WILL NEVER REACH A POINT WHERE ENTITLEMENT SPENDING IS 100% of GDP REGARDLESS OF THE MEASURES TAKEN OR NOT TAKEN NOW, and that is exactly the picture the scare mongers are trying to plant ,At the current rate entitlements will eventually eat up the entire federal budget”!!!! It wont reach 70% ever… or even 50%”

    – You seriously have major comprehension issues….you keep making these ridiculous strawman arguments. Again, nobody argued that entitlement spending would eclipse GDP…..nobody argued that it would eclipse 50% or 75% either, or any other arbitrary percentage for that matter….the ONLY point that was made was that the TREND growth of entitlement spending exceeds that of GDP and thus it is disingenuous to point at todays ratios of 35% and say it doesn’t matter. According to the CBO this ratio was 20% not long ago. Given the growth rate….if gov’t expenditures/GDP breaches 40% will it still not be a problem? (this is where socialist Sweden’s average is BTW)….how about 50%? at what point do we look at trends and growth rate and say the trajectory is troubling? To Be clear……at no point have i said or even insinuated that Expenditures will exceed GDP so you can save your strawman nonsense.

    If you have an actual rebuttal, im all ears, but save your strawman arguments. they are a waste of time and show your ignorance.

  • Stephen

    Unfortunately, the modern take on capitalism is oft based on the take on it defined by modern management theory. Hence, like most wars it’s been rewritten to suit the aims of the winners.
    Taking a more rational view though you would always wish for capitalism to be based upon a concept of shared equity ,because otherwise you are backing a system that will implicitly fail. I think you need to consider human nature first and economics second.
    It really isn’t a question of “morality”. This is exactly the kind of thinking that get’s people emotionally involved in this issue of capitalism and socialism. it’s wrong and frankly bad critical thinking.
    Concentrate on what do you need for the system to be sustainable? Think of answering that question in terms of human behaviour.

  • Greg

    Once you make money your God bad things happen too!

    Collectivism isnt making the state your God, collectivism is finally realizing we arent an island, we cant “do it ourselves”, and looking for ways to exist within the community of people we share our piece of the planet with.

    Conservatives try to make this community as small and tight and pure as they can…… liberals are simply more inclined to trying to make this community as large as they can. Thats all. Nothing nefarious on either ones part, simply wired differently

  • Greg

    “The charge of Racism is so common place, it has lost any of it’s original meaning…”

    Hmmmmm sounds like the charge of socialism to me ; )

  • Nils

    Wired differently? Is there some research on that?

  • Greg

    “.the ONLY point that was made was that the TREND growth of entitlement spending exceeds that of GDP and thus it is disingenuous to point at todays ratios of 35% and say it doesn’t matter. According to the CBO this ratio was 20% not long ago. Given the growth rate….if gov’t expenditures/GDP breaches 40% will it still not be a problem? (this is where socialist Sweden’s average is BTW)”

    And Im the one with reading comprehension problems?

    That paragraph is a clear example of what Im talking about. It used to be 20% now its 35%…. at this rate …. WHERE IS IT GOING TO GO!!!

    Do we need to discuss how much the govt should spend on things?… of course
    But framing it the way they do is pure scare tactics and specious. Why is 40% a problem? Its not a problem because they might run out of dollars in the future.

    And you are wrong that they are not trying to create the picture in the minds of the rubes that “at this rate eventually it will eat up the entire budget!!!”

    But what if it did eat up the entire budget?

    What if the only spending the govt did was universal healthcare for all AND retirement income. Thats all. Essentially replacing health insurance and most investment brokers. Everything else would be left to the market. No farm or energy subsidies ……..no military. This would not change the solvency of the US govt but would greatly reduce some costs to working people allowing them to spend their incomes on everything else the private sector created.

    But the largest point in response to your highlighted paragraph above is that the divergence of the trajectories has less to do with govt spending more on those things but instead its due to GDP falling in 2007-2009

    If Nationwide wrote you a letter tomorrow saying “Due to the projected cost of accidents in the future we are paying less on your claim today” you would rightly be puzzled. What insurance cos do is continually raise rates for their services yet somehow the govt (who is supposed to be operating like a business or household according to the knuckleheads) cant and must simply cut benefits.

    Again as I said we need to discuss how much we spend on these things but aggregating it and comparing it to GDP at the worst period of GDP growth in recent history is disingenuous.

    One thing, SS/medicare are PAID BENEFITS not entitlements….. this should be continuously shouted. But even using the entitlement paradigm the only question to ask is this “Is 2500/month too much”

    And of course to answer this one must look at what 2500 month (max benefit for people retiring at 65 in 2013) can buy at current prices. I think 2500 month is far from too generous.

  • Shorehaven

    These “capitalists” too often were demonized as profit mongers and people forget they were movers and shakers. They got things done.

    NYC is a great example. Take a poll of New Yorkers and find out how few of them know the NYC public libraries, Grand Central Terminal, the old Penn Station, the tunnels under the Hudson, etc. were funded and/or built by these capitalists and not the by the government.

    Vanderbilt built Grand Central, the Pennsylvania RR built the old Penn Station and tunnels, and Carnegie funded the libraries.

  • Shorehaven

    The government ripped down the old Penn Station, which many said was a superior building to Grand Central, and replaced it with the present Penn Station, which is a dump.

    Capitalists built the Empire State Building in 15 months; the government (Port Authority- quasi government) has spent over a decade on the unfinished Freedom Tower.

  • pantmaker

    The folks you are calling out for the “failed socialist state” nonsense seem to be misusing the word socialist. I believe their perspective is more accurately supported with the term welfare state. The data comfortably support the idea that we are,by definition, a welfare state. Throw in a state owned automobile company, the occasional mega-bank, a seized GSE or two, a mechanism to essentially control the equity market, a voracious appetite for MBS, vastly expanded food stamp recipients, growth in disability numbers, NSA and socialism actually sounds reasonable.

  • pantmaker

    “Of course the government is more involved. You don’t grow a country from a few million people to 300 million people and expect the government to shrink.”

    I don’t believe the size, scope and power of government should be tied to population figures. I am an advocate for a center here in the valley for homeless senior citizens. Every day we serve the needs of roughly 150 elderly. We have an over worked full-time staff person whose job is to help folks navigate the red tape of our super-sized, mind numbingly complex government. They can at the very least just get out of our way.

  • socal

    gov’t is a purely self-interested entity-always has been and always will be. experienced business people understand that business partners do not care about them because it’s not what they’re incentivized to do. gov’t is not incentivized to concern itself with protecting property rights. an informed populace is the only thing to reign in their greed. unfortunately, that’s not going to happen.

  • socal

    if it doesn’t transpire as you predict, are you going to come back on here and admit you were wrong?

  • Hans

    Adam, I am not sure and I wish they would have included a link regarding their standard..

  • Hans

    “Socialism is when the government owns the means of production, determines what will be produced, and generally directly pays the workers.”

    Then what is Communism?

  • Hans

    I see no nexus: perhaps you could expand upon your logic.

  • socal

    to me, everything stems from individual liberty. all of that is out the window. we can argue all day long about what is communism, socialism, democrat, republican, right, left, moderate (all of these terms have different meaning depending on what imaginary line you were born in). the numbers really don’t matter at all at the end of the day. the rule of law is the real barometer of where society is at the moment, and right now, your primary rights to privacy, free speech, and more are all compromised. you can’t really say with certainty what your rights are. do you have free speech? well, if it’s not licensed, or you didn’t get a permit, or you looked at the police officer wrong… if you don’t have privacy, you don’t have free speech. if you don’t have free speech, you don’t have democracy. pretty simple logic. refute if you dare.

  • socal

    to me, everything stems from individual liberty. all of that is out the window. we can argue all day long about what is communism, socialism, democrat, republican, right, left, moderate (all of these terms have different meaning depending on what imaginary line you were born in). the numbers really don’t matter at all at the end of the day. the rule of law is the real barometer of where society is at the moment, and right now, your primary rights to privacy, free speech, and more are all compromised. you can’t really say with certainty what your rights are. do you have free speech? well, if it’s not licensed, or you didn’t get a permit, or you looked at the police officer wrong… if you don’t have privacy, you don’t have free speech. if you don’t have free speech, you don’t have democracy. pretty simple logic. refute if you dare.

  • Billiejones

    Greg,

    you realize that this entire discussion is about “what constitutes socialist type spending” right?

    “But framing it the way they do is pure scare tactics and specious. Why is 40% a problem? Its not a problem because they might run out of dollars in the future.”

    – Perfect example of what im talking about…..more strawman arguments. Who is “they”? and who are you arguing with? Nobody in this thread has said that we might run out of dollars in the future…..i challenge you to find one instance.

    “And you are wrong that they are not trying to create the picture in the minds of the rubes that “at this rate eventually it will eat up the entire budget!!!””

    – WTF are you talking about? you are tilting at imaginary windmills…….again who is “they” and what do “they” have to do with anything that i said or was said in THIS SPECIFIC THREAD?

    “has less to do with govt spending more on those things but instead its due to GDP falling in 2007-2009″

    – Seriously? I understand what you are trying to say here but you cant actually believe this?

    “If Nationwide wrote you a letter tomorrow saying “Due to the projected cost of accidents in the future we are paying less on your claim today”

    – ???? you must be kidding……this is EXACTLY what insurance companies do and understandably so. Although they make the adjustment through the premiums as opposed to the payout (though it can be rightly argued they adjust the payout as well through less obvious tactics). Estimating the “projected cost of accidents” is what insurance companies pay actuaries for. Why do you think your premiums change after a ticket or accident? its because the “projected cost of (your) accidents” went up and the insurance company is adjusting for that risk…..its common sense.

    “aggregating it and comparing it to GDP at the worst period of GDP growth in recent history is disingenuous.”

    -Heres the root of your problem…..you appear to believe that ’07-now is an anomaly……in your mind the highs in ’06-’07 were fundamentally sustainable and valuations were normal….waitresses with 100% LTV home loans in houses that were 20 times what they could actually afford were sustainable……..its just that pesky ’09 anomaly occurred, but we should project that everything will return to the heady heights of the ’06-’07 highs. Further, we should model GDP accordingly….right? $4t and 5 years later and we have barely made a dent and it can be argued that the progress that has been made is on thin ice.

    “One thing, SS/medicare are PAID BENEFITS not entitlements”

    – Technically you are right, but unfortunately it was structured in a way that was unsound from the get go……SS and medicare rely on unsustainable demographic trends. In order for them to work, each subsequent generation must be larger and wealthier than the previous generation…..obviously not possible long term. Unfortunately the reality is that you cant sustain something that cant be sustained……..even SSA recognizes this…..do you not get your yearly SSA statement showing your earned credits and detailing the fact that there simply isnt enough to go around after a certain projected year? Perhaps you should call SSA and tell them that its “earned” and thus they MUST payout……please tell us how that works out for you.

    “And of course to answer this one must look at what 2500 month (max benefit for people retiring at 65 in 2013) can buy at current prices. I think 2500 month is far from too generous.”

    – OK just read your last paragraph…..assuming you are trying to say that SS needs to be reshuffled, i agree and this would prolong SS, but somebody ultimately gets screwed. Either a person pays in more than they receive or the younger generation gets very little/nothing. Ultimately it cant be sustained and attempting to do so is a waste of resources. SS ONLY works if each subsequent generation is wealthier than the previous generation…….it only takes one generation to reveal that its a ponzi scheme.

  • Greg

    Socialism is thrown around in such an inappropriate manner that it has become meaningless.. As Cullen so aptly points out very few understand socialism

  • Greg

    We really should take this discussion elsewhere billie but I do want to make one final comment

    I realize quite well what this discussion is about. I was criticizing the propensity of the deficit hawks to take the growth rate of programs and extrapolate them out decades to show how big they will become unless something is done NOW, which is pure crap

    You know exactly who “they” are…. it seems to include you. You who characterizes SS as a Ponzi scheme. You have no clue what a Ponzi scheme is if you call SS one.

    “Nobody in this thread has said that we might run out of dollars in the future…..i challenge you to find one instance.”

    OK here is your own comment above

    “do you not get your yearly SSA statement showing your earned credits and detailing the fact that there simply isnt enough to go around after a certain projected year?”

    Not enough to go around??
    Hmmm that sounds an awful lot like running out of dollars.
    The SSA statement is talking about DOLLARS, not pounds of flour. So if there arent enough to go around there must be a fixed stock of them that could someday disappear if we arent thrifty…
    What a load of crap!

    And yes I do believe the change in the ratios that have everyone so scared (ratio of rate of change of entitlement growth to rate of change of GDP) has much more to do with falling GDP then rising entitlement spending. “Entitlement spending has risen because we have more older people (who have worked and had money set aside form their checks) not because they are getting more.

    ” you must be kidding……this is EXACTLY what insurance companies do and understandably so.”

    WRONG! If I have a contract to cover x amount I get x amount, for the remainder of the contract. Yes, when I renew, the terms MAY change but the govt is trying to renege in middle of a contract ……. and using flawed reasoning to do so. Big difference

    “Although they make the adjustment through the premiums as opposed to the payout”

    At renewal, not midstream.

    “Why do you think your premiums change after a ticket or accident?”

    AFTER they have paid the agreed upon benefit.

    ” its because the “projected cost of (your) accidents” went up and the insurance company is adjusting for that risk…..its common sense.”

    As an aside, this has always puzzled me and is in fact an example of somewhat the same flaw I’m talking about. When Ive had an accident am I more or less likely to have another one. Most people have one. fewer have two, fewer still have three etc etc. Now if its the result of drinking or some other preventable cause ok but simply bad luck? I had a company refuse to re up my umbrella policy after my son had a completely accidental car wreck. No drinking no violation. Yes it was expensive cuz someone was killed but what are the odds something else will happen to me? Very likely Ive had my “unlucky event” so I should be free money for some insurer, but their algorithms are based on a flawed notion of probabilities in my view

    -“Heres the root of your problem…..you appear to believe that ’07-now is an anomaly……in your mind the highs in ’06-’07 were fundamentally sustainable and valuations were normal….waitresses with 100% LTV home loans in houses that were 20 times what they could actually afford were sustainable”

    Good comment, but thats not what I believe at all. There was a bubble and house prices were too high but we had a self induced over correction. Yes much real estate was selling above value but that really was secondary market stuff and not contributing to GDP entirely. Yes the income earned on the sales added to GDP eventually but the sale of already produced houses didnt. But…… we didnt have to react to the stock market losses with massive govt and then private sector layoffs, making our situation much worse

    “ts just that pesky ’09 anomaly occurred, but we should project that everything will return to the heady heights of the ’06-’07 highs. Further, we should model GDP accordingly….right?”

    No, but we are still way off our potential and we fell lower then we needed to based on a housing sector bust.

    “One thing, SS/medicare are PAID BENEFITS not entitlements”
    – Technically you are right, but unfortunately it was structured in a way that was unsound from the get go”

    So what? We can restructure it. We are being told that its unsustainable, which is a lie

    ‘SS and medicare rely on unsustainable demographic trends. In order for them to work, each subsequent generation must be larger and wealthier than the previous generation”

    NOT TRUE….. AT ALL

    We only need to be more productive.

    In order for our seniors to not have to work and to be able to spend without causing inflation, we only need for our young workers to be able to produce enough stuff that the seniors spending is absorbed without being inflationary.

    We dont necessarily need more. What if we develop robots that can do all that work? And if we can produce more with less we will by definition be wealthier

    Listen I dont care what the SSA says about there projections. They are based on a false paradigm that has a fixed amount of money, which needs to be borrowed or taxed…… totally false.

    The only question is can the working folks produce enough extra stuff so the non working folks can buy some without driving up prices. Based on our history Im not too worried that the workers will ever be unable to do that

    And today, unless you think 600/week for every person over 65 would be inflationary, SS is no problem at all.

    I challenge you to show me how 600$ week for everyone over 65 will make things un affordable for you.

  • Suvy

    Tell that to the Europeans. They think we need to be more like them, which makes me burst out laughing. The problem is that most of the countries today are either mercantilist or socialist and the US is probably one of the most, if not the most capitalist country today. We’re about to see mercantlism begin to collapse into its death spiral while socialism is already collapsing. Either way, none of those garbage systems can withstand the innovative capacity and ingenuity of American capitalism.

  • http://statedebtlie.wordpress.com/ Staatsschuldenlüge

    “But are we really a failing socialist state?

    No that is the wrong expression.
    What is called when private sector and public sector melt together?
    Its called Fascism.

    Franklin D. Roosevelt
    “ The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism — ownership of government by an individual, by a group, or by any other controlling private power. ”

    — Franklin D. Roosevelt, April 29, 1938. Message to congress.

    wiki:
    “Originally, “fascism” referred to a political movement that was linked with corporatism and existed in a single country (Italy) for less than 30 years and ruled the country from 1922 to 1943 under the leadership of Benito Mussolini. “

  • http://statedebtlie.wordpress.com/ Staatsschuldenlüge

    I mean, you still dont know why the US doesnt behave like an autonomous currency issuer, but could if they want to?

    Because its in fact already working like a company, public sector since the 90th has ben privatized…and work like corporations.

    A state, an autonomous currency issuer wouldnt be registered as a company.

    http://gyazo.com/b9faffea1c13ac552356569aa54d71e9

  • JWG

    Socialism has a long and distinguished history in the USA. Eugene V. Debs ran a third party campaign early in the 20th century that was the Socialists’ high water mark as a political party. The Democrats co-opted the Socialists by adopting much of their platform. Unemployment insurance, social welfare, Social Security, Medicare, Medicaid, food security programs, state banking etc. are all Socialist ideas that were adopted by the USA in a classic mixed economy. The banking sector is now a government captive, GM is a ward of the state, the residential mortgage market is almost exclusively federal, the student loan market has been federalized, and the labor market is becoming ossified by well-meaning federal and state laws. There is little difference between the USA and the social democratic European welfare states, which is fine with the Democrats and a majority of US voters.

  • Nils

    When there are no property rights whatsoever.