snowjeeper

Why can't I get to page 2? lol. Let me in!

skycdo

Actually it's the other way around. You eat the children who are suffering in poverty and misery. There are far more of those than rich kids and you can get rid of the poverty class. The article is called "A Modest Proposal" by Jonathan Swift. Read it, very interesting.

HoboMaster

Wow weird, I was just thinking of that same writing. Legendary piece of satire.

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PowderHound and TreeNinja

gibbous

To me it sounds like that's assuming that there is currently a huge amount of private enterprise that's not growing ONLY because they can't get a loan from anybody. I've heard of some small businesses that are running into problems with getting financing from cautious banks, but I still have to believe that if there were really a group of industries in the U.S. that had real potential to collectively put millions of unemployed people back to work, investors would still be lining up to give them loans so they could reap the benefits as well. China is still loaded, the big banks are still making huge profits, why wouldn't they want to use that money to make more if they thought they could? That's what investors do.

Maybe if the government did borrow less, investors would be willing to put more money into a few things that they currently see as too risky relative to the security of government bonds. But are there really so many of those risky new ventures in the U.S. that it would turn around an entire economy? Pretty hard when there are companies overseas that will do the same thing for way less money IMHO...

blondieyo

It's not a straight out 'there is no money left to loan to investors' but the more money the government borrows, the less there is for the private sector in total, like taking a bigger slice out of a pie. This leads to an increase in the real cash rate on the loanable funds market. So basically it costs more to borrow money which is obviously a disincentive to invest and grow. Note when I say invest I mean borrow money to undertake new projects to increase capital NOT 'investing' in shares, bonds or a high interest rate bank account. I'm not saying this policy (if you could call it that) is effective at all at increasing growth, it's purely one way of looking at recovering from a recession.

Also just adding something here, if you looked at the profits most banks make, they may be making large profit figures, however, the profit margin is tiny in terms of percentage of a rate of return. Just taking a guess but it probably wouldn't be any higher than a 3-5% return on what they're investing which really is sweet f*** all.

gibbous

By an inflation-adjusted dollar, the average CEO makes four times what they did in the 70's for doing the same job. Are they really four times more valuable? Meanwhile, middle class wages have been growing at a rate that is far less than the rates of increase in costs of housing, energy, education, health care, etc, etc, etc... That just makes more private debt, less demand, and fewer jobs as a result. Add in the globalization of the economy and outsourcing of everything that can be done cheaper elsewhere as you mentioned, and it seems were are truly screwed unless our government can change in a big way...

Donutz

In Canada, couple years back, the gov't put itself in charge of distribution of pot for medicinal purposes. The department lost money. The government can't even sell pot at a profit.

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Illegitimi non carborundum

Mountain Days: 30

snowjeeper

The difference is that the private sector can easily charge more money to make up for their inefficiencies.

HoboMaster

This is true and is reflected by a decline in consumer and employee benefits over the past 30 years. As new costs have arisen, they have been mitigated in some way or another by shoving the cost on consumers/employees. Cutting profit for the sake of efficiency is only ever a very unpopular last resort.

You can argue that because the private sector is profit driven, they do have a high efficiency rate just for the sake of making more money, (if you can make more money by running a tight ship, you will do it).

If you could make governmental agencies run on a system of non-critical incentives, they would probably be more likely to have higher efficiency rates. Incentives often corrupt institutions though, so it's a bit of a quandary.

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PowderHound and TreeNinja

blondieyo

It's not just charging more, it's actively seeking to keep costs as low as possible in order to make as large a margin possible. That's why privitisation is so effective.

A businesses goal is to make their business as profitable as possible, if it is profitable it's succesful. A government running a sector is less concerned with making a profit and more concerned with just covering their costs in order to offer a service. If they're just covering their costs the price of whatever they're providing will be less but they also won't be as tight on keeping costs low.