Tag Archives: US Politics

Government Transfers and GDP

I have started reading through the Captain’s Enjoy the Decline and in the 2nd chapter he talks about proving the US is in a permanent decline. He brings up his old point here about how GDP is growing at 2.2% rather than the 4% of yesteryear, and how we could have an average income of $100,000 if the government didn’t interfere. He was also talking about how government is now almost 40% of GDP. That got me thinking about the government and the GDP.

The most common method of calculating GDP is is through the use of this formula:

GDP = C + I + G + (X – M)

Or, in English:

GDP = private consumption + gross investment + government spending + (exports – imports)

What I’m going to focus on here is G. As per wikipedia:

G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. It does not include any transfer payments, such as social security or unemployment benefits.

When calculating GDP, the measure of government contribution to the economy is NOT the value of goods and services the government produces; it is the measure of the value of the resources the government consumes. G in the GDP measures what the government takes out of the economy, not what the government puts into the economy.

For example, if the the government spent $200-million building a road it would count the same as if the government spent $200-million moving rocks from point A to point B and back to Point A. As long as the government wasn’t using the resources for transfer payments, they could bury the money and GDP would increase. (See the Broken Window Fallacy).

For the rest of this post, we will refer to C, I, & (X-M) as “actual GDP” and G as government spending.*

Here are the annual real GDP growth rates for the US since 2008:

2008: -0.3
2009: -3.1
2010:  2.4
2011:  1.8
2012:  2.2

Here’s G:

2008: 2,497.4
2009: 2,589.4
2010: 2,605.8
2011: 2,523.9
2012: 2,481.3

and growth in G:

2008:  2.6%
2009:  3.7%
2010:  0.6%
2011: -3.1%
2012: -0.6%

Over the last 5 years, since the housing crash, the portion of GDP that is made up of G has declined by 0.6%. US GDP on the other hand, has increased by 6% over the same time period.

Originally, when starting this post, I was wondering if increased government consumption was resulting in a higher G, inflating GDP numbers. In other words, I was suspicious the government was simply consuming more resources (whether for productive or unproductive tasks) from the private sector to mask a decline in actual GDP.

The data says it has not; in fact, the opposite is true, G has somewhat declined as a percentage of GDP. I was tempted to just junk this post as my suspicion and the point I was thinking I might make proved to be incorrect, but I decided I’d post this information here anyway for anyone who’s curious.

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This however, brings up another point for my post.

According to Table 1.1 here, federal government spending has increased by 27.1% between 2008 and 2012. This new spending represents 6.0% of 2012 GDP. Total government spending has increased by 10% in the same time period, representing 3.6% of 2012 GDP. Interestingly (and completely surprising to me), non-federal government spending (total minus federal) has actually decreased by $323.8 billion, or 6.6% over the same five years, representing 2.4% of 2012 GDP.

As mentioned above, G only measures what the government consumes or invests in, it does not include government transfers.

G has more or less stayed the same (and has actually declined as a portion of GDP), while government spending has increased by over a quarter.

What this means is that the none of the new government spending is from the government actually consuming or investing in anything. None of the new government spending is new roads, new hospitals, new schools, or new jet fighters; none of it has even gone to increased bureaucrat’s salaries, buying heroin for the homeless, or burying resources in the desert. None of the new spending was used on anything remotely productive or even on a program pretending to be productive.

All 27.1% of the new federal spending has gone to increased transfers.

In other words, since 2008, the federal government has forcibly taken an extra 6% of the entire economy from some people and transferred it to other people with not the slightest pretense of it being for the public benefit or as an investment in the future.

This is naked robbery.

In addition, part of this extra federal spending has come at same time that state spending has been reduced, further centralizing government spending.

Just federal transfers, not including state transfers or federal consumption of investment as found in G, now make up about 20%** of the economy. Six percentage points of that came from the last five years.

The federal government has taken an extra 6% of the entire US economy from the producer class and given to the parasite last five years and currently spends an one-fifth of the economy simply in transferring money from producers to parasites.

If this pattern continues, the US will become a centralized socialist state.

****

* All dollar amounts are 2005 US$ and in billions.
** May be slightly off, but not by more than, maybe, a percentage point. 2012 #’s were used for GDP and federal outlays, but I could not find a 2012 number for federal G, so I used the 2011 number.

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Americans Deserve to Get What They Want

So, by now most of you have heard Obama won. I’m not American and have been moderately ambivalent about this election; a moderate conservative like Romney is not what America needs at this time.

Despite my ambivalence about which Republicrat won, I think in retrospect this election was very important because of the issues at play and how they were handled. In particular the narrow-minded childishness of it all.

Right now the US is drowning itself in debt, its social security program is unsustainable, entitlement programs are growing and becoming unsustainable, unemployment has been stuck at a high level and the economy is still suffering, the upcoming generation is drowning in student debt and are unable to find gainful employment, one in seven Americans are on food stamps, the fed has a policy of printing $40-billion/month to create inflation, the US is engaged in two wars and a massive assassination program, and Obamacare represented a takeover of a large portion of the economy (along with the attendant side effects). Essentially, America is nearing the end of the process of moving from a (somewhat) free market economy to a broke European cradle-to-grave welfare state.

Whatever side of the issue you fall on (and most of my readers are probably opposed to Europeanization), this is a huge change that deserves debate. Even if you agree that the US is on the right course and should become a European-style welfare state, it is still something that should be debated, voted over, and planned so the US welfare state can become a moderately sustainable one like Germany or the Nordic countries rather than a fiscal disaster like the PIGS.

So, with all these important issues of war, America’s future, the economy, etc. what were the issues that got traction?

Muppets and “binders of women”.

Think about that for a minute: with America’s economic and post-secondary education problems almost literally destroying an entire generation and America’s future in the balance, the issues everybody talked about and that got the most traction were about was a few million dollars of funding for a TV station and whether 30-something women should have to pay for their own contraception.

Really? Fucking really?

What is wrong with you America?

Are you a bunch of fucking children?

****

I’m not exaggerating the muppet thing one bit, but I might be being somewhat unfair on the “war on women” thing, so let’s analyze it a bit more.

The war on women has revolved around the following:

  1. Defunding planned parenthood
  2. Fluke wanting religious organizations to pay for her contraception
  3. State laws restricting abortion access.
  4. A few dumbasses saying stupid things about rape.
  5. “Binders of women” and the pay gap.

The first and second restrict nothing and are no more a “war on women” than defunding Big Bird is a “war on literacy”. Whatever your opinion on contraception and abortion, paying for your own shit is one of the hallmarks of being a responsible adult. That who funds contraception can even be debated by supposedly “serious” people is proof of the childishness of American politics.

As for the third, it is a major issue but not a presidential or federal one.

I’ll write it clearly so all the idiots on both sides can hear it. I don’t care whether you are pro- or anti-: abortion is no longer a federal issue. The courts have decided and are supported in their decision by enough of the population that no president will be able to restrict abortion no matter how much he may want to. There may be some fights at the margins at the state level, but only at the margins and only at the state level.

Any “war on women” rhetoric saying there are threats to abortion at the federal level are simply fear-mongering. Any anti-abortion activists that are are trying to limit abortion at the federal level are frivolously wasting their time, it would be much more productive to focus on changing the culture than the law. Debating abortion on the federal level is about as relevant as debating abolitionism.

Nothing short of the second coming of Christ is going to result in the banning of abortion in the US at any point in the foreseeable future.

As for the fourth, any group of 535 people will have its share of dumbasses. The opinions of these particular dumbasses matters, but only for their congressional districts. Their idiocy is a local matter. Unless the presidential candidate and/or the party as a whole holds these views on rape (which they have disavowed). It is a non-issue at the presidential level.

The fifth may matter if it exists (although, the existence of an actual gap is empirically dubious). But assuming it does exist, a 17% (or whatever the current number being used is) wage differential pales in economic significance to the other economic woes facing the US. The near doubling of the unemployment rate since 2008 combined with a full 2% of the population dropping from the labour market. The 50% unemployment and underemployment rate of an entire generation. The wage gap may be something to debate at some point in the future, but the overall state of the economy is hurting women much worse than any potential wage differential. Act like adults and shoot the tiger in the living room before fretting over the house cat.

In other words, the entire “war on women” is one big non-issue for a presidential campaign.

****

The most important part of this election was simply the frivolity of it.

Elections have always had mud-slinging, character assassination, and stupid political games, but this election was special. There were/are major obvious structural problems with the US and its economy that need to be addressed (whatever the solution) and this election was fought on none of them.

It was fought on frivolities and non-issues.

Up to this point I have had hope for the Republic. Obama may have been a liberal and won in 2008, but he won for some serious reasons (economic collapse). Bush won in 2004 over a debate over a serious issue (Iraq War). Even in 2000, when the US was running smoothly and the US could afford to debate frivolities, the election was mostly about serious domestic issues.

I had hope that someone the serious issues facing the US over the next few decades would be addressed, if not this election than some other one, because at some level I thought adults were running the establishment.

Even is Obama had won because voters debated over and decided they wanted a European-style social democracy rather than a free republic, I would have held some level of hope for the Republic, because then at least adults (however incorrect they might be) would have been in charge. Then when the failure of social democracy became apparent (as it has in Greece) adults would have been able to pick up the pieces.

But choosing the executive based on a puppet show and who pays for contraception (not even the legality of contraception, but simply who pays) when the US is in the midst of the worst recession in decades and the system is eating an entire generation?

Really?

It seems the US electorate are a bunch of ignorant little children.

At this point I’m just going to say, y’all deserve the decline.

I’m going to enjoy a delicious, steaming cup of schadenfreude watching you suffer over the next decade.

****

Tim had similar thoughts:

We’ve re-elected the president. I hope that those of you who voted for him get what you wanted, good and hard.

****

For your amusement, here’s some other bloggers’ post-election writings in no particular order. Doing it this way will avoid clogging up next week’s Lightning Round with only election stuff.

Jerkonomics
Jack Donovan

Rollo and Mark Minter
Private Man
Freedom 25
Empathological
CMD-N
Sunshine Mary
Ian Ironwood
John Wright
White Sepulchre
The Captain
The Captain Again
Vox
Vox Again
GLP
Neanderpundit
Apocalypse Nowish
An Instapundit Reader

Update: More Post-election Analysis – 2012/11/08

Publius
Bill
Tim (@ Matt Forney)
Carnivore
Simon Grey
Simon Grey Again
A Physician (h/t: Smallest Minority)

Update: A few more – 2012/11/09

Bill Again
Young Hunter
Mangan
Professor Hale
Frank Fleming
James Taranto
Beverly Gage

Update: One last time – 2012/11/13

Jack Donovan again
Suyts (Related, Related)


A Lesson on Partisan Hackery

I was cruising Slate today, my typical source for keeping informed on current goodthink, and came across a few articles from that paragon of reasoned thought, David Weigel.

He provided an interesting lesson on what being a partisan hack for too long can do to a person’s brain.

At 2:03 pm, David  wrote about a Democratic ad that selectively quoted Romney on abortion. He said “so, yeah, that’s misleading.” He then goes on to justify it being misleading because it revealed something  he believed true about Romney.

At 9:25 am, David wrote about Republicans selectively quoting both Obama and Biden. His response, derision at gaffe-spotting and people are hyperventilating for thinking about it as it doesn’t reveal anything.

In less than five hours, he changed his opinion on selectively quoting politicians to mislead individuals from derision because its a waste of time to being justified because it reveals the truth.

Today’s lesson: Being a partisan hack can really damage your reasoning abilities.


Lightning Round – 2012/09/25

Elihu finishes up his series on Christian playerdom.
Related: Vox crushes the male hamster.
Related: The Christian Player has started a newish blog. He gets the problem, but his solution seems off. Will have to watch where this goes.

Vox explains the appeal (or lack thereof) of women’s intelligence to men.

Hehe… The people of Trader Joe’s.

A message to young women.
Related: How to waste your 20’s, so you can do what your really want in your 30’s.
Related: Your price is too high.

Sometimes you need to draw the line.

Hilarious.
Related: Female dress as solipsism.

Badger contemplates marketing to young men.

This guy’s experiences with online datign sounds like mine. Online dating is horrendous.

Be careful chasing alpha, you just might get it.

The Captain points out a wonderful case of self-delusion.

Dimensions of a perfect women.

Wow… Some men seem to have a complete lack of balls.

I’ve been ignoring quadrant two some recently. Should get back on that.

American men more likely to die from suicide than car crashes.

You have worth.

Don’t become a rentier.

We elect the bastards we deserve.
Related: The American electorate is retarded.
Related: Yup, they are.

Us Canucks have front-row seats to America’s self-destruction.
Related: We are now freer than the Yanks.

People don’t trust the media?!? How could that possibly be?

Why intellectuals oppose capitalism.

“The average effective federal tax rate for American taxpayers is 11%, according to an analysis of 2009 IRS data by the Tax Foundation”
Related: Who pays taxes in the US.

Wow, just a few decades late. Better late than never, I guess.

Some people are just horrible people.

Making the job easier makes more women join. Hurrah!?? GLP’s earlier post on the issue.

Athen’s municipality economically collapses. Expect more in the future.

You are libertarian.

(H/T: GLP, SDA, Althouse, Borepatch, AG, MF)


Lightning Round – 2012/05/01

Everybody enjoying May Day? I hope you are.

Did you know that the average person could be making $100,000 a year? The Captain does the math.

A great speech given to the Fed. Long, but read it.

“The president has a very difficult time with the business community. Most people in business and most people who are successful are Republican that’s just a fact of life.” I wonder why?

The system is hungry; it must eat. Poor Sweden.

Marriage is fundamental to the church: when it declines, so to does the church decline.

Related: Why Evangelical Princesses are un-marriageable; a great post from CMDN.

We won! Yay!?!???

How you create a mass-murderer: Teach him to hate himself, then act surprised when he externalizes that hate.

Becoming as weak as your foes doesn’t help you or them.

Shame the beta month; it looks like it could be interesting.

(ht/ SDA, AMN, CC)


Would an Obama Win be Best for the Right?

I came across this today (h/t: Instapundit) and the excitement over a potential Romney win is palpable, but is a Romney what the right should be hoping for? I’m not so sure.

Romney seems like a decent enough politician. I  tend to think of him as similar to Canada’s Prime Minister. Both Romney and Harper are pragmatics on the centre-right. They can be counted on be competent managers and run a country smoothly. They might make some some minor adjustments to slowly move the country rightward, but you can’t really expect anything overly reactionary or radical changes  from them. They will keep the ship of state steady.

In Canada, steady as she goes works fine for Harper; the country is mostly in good health, the economy is functioning fairly well, taxes are fairly low and lowering, and debts and deficits are not great, but they’re in control and there is no permanent structural deficit. The country is on a decent enough course, and while Harper may not be everything the right hoped for, he throws us the occasional bone. He’s a competent prime minister.

The US is in a different situation though, the economy has stalled, a structural deficit has been built into federal finances, debt is out of control, taxes are high, and the country is imploding.

Romney may slow the implosion, he will run the US much better than Obama, and he may stall America’s impending doom, but everybody knows he doesn’t have the ideological strength to do the harsh cuts necessary to bail out the state. At best, we can expect him to put off the inevitable sinking of America by a few years or a decade.

The alternative, though, is Obama, who has shown he can not right the economy, who’s running on a counter-productive eat-the-rich platform, who has overspent and who will continue to spend the state into bankruptcy.

So Romney’s obviously better then, no?

Maybe not. Communists have this idea of heightening the contradictions. This basics of this idea is that to hasten the advent of communism, communists must make the capitalist state as brutal as possible to the proletariat so as to grow the seeds of class consciousness to hasten the communist revolution that follows. Working from this idea they oppose soft-left/liberal ideas such as the welfare state, public health care, etc. which make the lot of the proletariat more comfortable. A comfortable proletariat may not notice the chains of the capitalist system and would have less incentive to cast off them off, forestalling the inevitable rise of communism.

So, how does this idea apply to the US and Romney?

Simple, the election of Romney will slow, but not halt, the economic implosion of the US. The right, having beaten that socialist Obama and installed the conservative Romney in power, will congratulate themselves on a job well done, and the momentum of the Tea Party movement will peter out, mistaking victory in battle, for victory in war. America’s decline will continue, but slower. The collapse would be postponed, but will still be inevitable.

On the other hand, if Obama wins, he will pillage the producer class, he will continue to make drunken sailors look like paragons of fiscal responsibility, the beast will be gorged, and his class war rhetoric will drone on. The economy will stay stuck in neutral, high unemployment will continue, firms will continue to leave for greener pastures, and the dollar will continue to decline. There will be no recovery; America will suffer, America will bleed. Producers will know they are being mugged, centrists will realize they are suffering, the left’s disillusionment will rise, the Tea Party’s momentum will continue to grow, and the young will begin to realize they are being chained in perpetual debt slavery.

Then in 2016, American’s will be forced to accept they need change. Thanks to four years of Obama, Ron Paul did fairly well in the primaries; he brought libertarianism into the mainstream and established the ideological groundwork for its continued expansion but he suffered from his supposed extremism. But what of a more moderate libertarian Rand Paul after 8 years of economic hemorrhaging and overwhelming encroachment of the federal state under Obama?

Cain surged, but ultimately fell due to the perceived unseriousness of his campaign and a couple of scandals. But what of a serious Paul Ryan pointing to his long-ago proposed plan for fiscal sanity after 8 years of  Obama’s economic insanity?

Would not Rand Paul or Paul Ryan have the ideological fortitude to do what is necessary necessary to bail the state out and keep her afloat? After 8 years of Obama would not the American public be begging to be rescued. Would they not look to anybody who was not a borderline-socialist Democrat for rescue? After 8 years of Obama and the loss of two establishment Republicans in a row would not the Tea Party and the grassroots have the strength to sideline the GOP establishment and run a hardline conservative?

If Romney wins, the US continues to slowly implode.

If Romney loses, Obama will heighten the contradictions of the welfare state. He will sink the Republic. Then, the right would simply have to grab hold of the opportunity to save her and set her on course once more.

Maybe the right should hope Obama wins.