Thomas Piketty: 'The Draghi report is a step in the right direction'
lemonde.fr
lemonde.fr
Western countries reached this level of debt after five years of wartime spending. I'm no economist, but to me the fact that we're seeing public debt this high amid relative peace and prosperity is very concerning.
What's going to happen if another great war or similar crisis occurs? The US essentially doubled its debt (as a percentage of GDP) during WWII. If the West is starting from the post-WWII position, what's going to happen if something really bad happens?
The trend toward expansive government that is exemplified by this graph on social welfare spending as a percentage of GDP over time is the elephant in the room, and what any economist worth their salt would blame for the growing sluggishness of the EU economy:
https://ourworldindata.org/grapher/social-spending-oecd-long...
Meanwhile the US government spends about 35% of our GDP in a good year [1], and it is well known that over half of that goes to social security, medicare, and a smaller amount to housing. [2]
My only point is that it is easy to see that graph you posted and think that things are out of control, but the reality is just that in a post-war, urbanized, liberal society the governments job is to serve the people and sometimes that means spending money on them. I know surely none of us here will ever take adventage of medicare or social security in our old age. We will not be hiring students who went to state-funded schools (ew) or who live in subsidized housing--if they are that poor they can't work for me! But normal pepole actually do sometimes get help from the government and it is fine.
[1] https://tradingeconomics.com/united-states/government-spendi... [2] https://www.nationalpriorities.org/budget-basics/federal-bud...
Increasingly taxing people to subsidize other people, through large government bureaucracies with a monopoly on those tax dollars, leads to slower economic growth. Picketty is ignoring the elephant in the room when trying to identity the cause of European economic sluggishness.
And if you want people's quality of life to improve, reduce their tax burdens and lift regulatory restrictions on their business activities, so that they can serve consumers more effectively by investing more of their time and money creating firms that cater to them.
Even speculation in the secondary market is productive. It supports the valuation of securities, which allows companies to raise more capital on issuances of new societies, which in turn provides firms with funding for the formation of productive assets.
However, buying shares in a startup can be interpreted as "speculation" but I would see it as a good thing, so my choice of terms was not the best.
I dont see Blackrock or Blackstone buying up houses as a good thing. I see that as "speculation". But I realize now my definition of the term is much different from most other people.
Now Single Family Houses are a slightly different thing, as much of their value derives from the land that they're built on, and you can't build more land. So the benefit of investors buying up SFHs is going to be much less significant than investors buying up units in high-density developments like condo towers.
Like startups?
Perhaps my definitions of "speculation" and "productive activities" go against conventions?
Yes, there are advantages and disadvantages to financial transaction taxes. I like them because they are progressive and reduce the profitability of share flipping. In theory, they would also reduce high-frequency trading, which seems like it's casino adjacent.
In other words, taxing transactions reduces division of labor, which is one of the main sources of productivity:
They're spending everyone's money. How about we don't enslave people to their government and simply leave us all to spend our own money and resources how we see fit. Don't give me any nonsense about the social contract or democracy. The government has grown beyond any reasonable remit it was granted and is enriching itself or investing in failed programs.
scarcity, for most people it's a representation of their labor valued on a market which in a fundamental way represents the energy they express
insofar as government whips it up out of thin air, they're stealing from everyone that's accumulated money in any degree and debasing their wages
To be clear, when I write not sure I mean not sure, not “no”.
The populations are getting older, health costs will tick up, so you can expect to increase those costs. But immigration is discouraged so you have to keep your workforce healthy
Raise taxes or debt for the monetary side. Divert workers and other resources on the implementation side. Both of those might be better used by the private sector
So “divert” seems misleading. If the American government hadn’t “diverted” funds to build ARPANET half a century ago, we’d probably be stuck with the equivalents of AOL-style walled gardens instead of a single Internet because that’s the kind of network that private interests wanted to have.
You're right in that you remark that it's less bad than it initially seems. Some wealth is indeed recovered when the broken window is repaired. However everyone is by necessity worse off than if you didn't break the window in the first place.
This leads to less effective allocation of capital, because large monopolistic government bureaucracies don't have the structure or incentive to perform anywhere near as efficiently as market actors.
This study both provides data and provides a number of citations to other studies which provide data on this correlation:
https://web.archive.org/web/20170821004405/http://ime.bg/upl...
Arguably the optimal operating point for an economic system, from a GDP point of view, is to maintain just enough public spending to keep a Robespierre from arising from the unwashed masses. Public spending beyond that is an unproductive waste.
Most of us would agree that sacrificing everything else on the altar of GDP is not what we want to do, though, so the (perfectly legitimate) question of where the compromises need to be made is always going to be on the table.
in the sense that Nancy Pelosi and others are enriching themselves through insider trading, I guess