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Government spending = unemployment

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yangusbeef
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Post: #1
Government spending = unemployment


Are there exceptions to this? Like communism, for example.

23.10.2015 22:49
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VineFynn
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Post: #2
RE: Government spending = unemployment

yangusbeef Wrote:

Are there exceptions to this? Like communism, for example.


This is a perfect example of correlation not equalling causation.

In fact, the opposite is true. Usually, unemployment = government spending. This is because as unemployment increases, the mandatory spending on unemployment benefits also increases as more people apply for it. Depending on government policy, other factors, such as subsidies, may also increase.

In addition, the size of government spending will also increase relative to GDP during times of economic bust, as the private sector will shrink whilst the government spending levels will remain the same.


I'm leaving and probably never coming back, so thanks for the interesting discussions I guess, dunno why im writing this nobody even irl gives a toss about me anyway
23.10.2015 22:57
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yangusbeef
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Post: #3
RE: Government spending = unemployment

VineFynn Wrote:

yangusbeef Wrote:

Are there exceptions to this? Like communism, for example.


This is a perfect example of correlation not equalling causation.

In fact, the opposite is true. Usually, unemployment = government spending. This is because as unemployment increases, the mandatory spending on unemployment benefits also increases as more people apply for it. Depending on government policy, other factors, such as subsidies, may also increase.

In addition, the size of government spending will also increase relative to GDP during times of economic bust, as the private sector will shrink whilst the government spending levels will remain the same.


Something has to fund it all.

23.10.2015 23:07
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Helsworth
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Post: #4
RE: Government spending = unemployment

It's the other way around, Yangus. Government taxation creates unemployment of money paying jobs, and government spending employs the unemployed previously created by taxation.
The fact that gov spending as % of GDP rises in periods of recessions (higher unemployment) is because the gov's net fiscal position is reacting to the shortfall in nongovernment sector spending.
It's an endogenous relation between the two.

@Fynn
And on top of more welfare spending, tax-revenue decreases because of depressed economic activity.


https://www.patreon.com/SerbanVCEnache

This post was last modified: 23.10.2015 23:40 by Helsworth.

23.10.2015 23:38
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yangusbeef
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Post: #5
RE: Government spending = unemployment

Helsworth Wrote:
It's the other way around, Yangus. Government taxation creates unemployment of money paying jobs, and government spending employs the unemployed previously created by taxation.
The fact that gov spending as % of GDP rises in periods of recessions (higher unemployment) is because the gov's net fiscal position is reacting to the shortfall in nongovernment sector spending.
It's an endogenous relation between the two.

@Fynn
And on top of more welfare spending, tax-revenue decreases because of depressed economic activity.


Okay

24.10.2015 00:09
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VineFynn
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Post: #6
RE: Government spending = unemployment

yangusbeef Wrote:

VineFynn Wrote:

yangusbeef Wrote:

Are there exceptions to this? Like communism, for example.


This is a perfect example of correlation not equalling causation.

In fact, the opposite is true. Usually, unemployment = government spending. This is because as unemployment increases, the mandatory spending on unemployment benefits also increases as more people apply for it. Depending on government policy, other factors, such as subsidies, may also increase.

In addition, the size of government spending will also increase relative to GDP during times of economic bust, as the private sector will shrink whilst the government spending levels will remain the same.


Something has to fund it all.


That's true, but irrelevant to the original question. A moot point, if you will.


I'm leaving and probably never coming back, so thanks for the interesting discussions I guess, dunno why im writing this nobody even irl gives a toss about me anyway
24.10.2015 01:07
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debauchery
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Post: #7
RE: Government spending = unemployment

Manufacturing = products

24.10.2015 04:02
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yangusbeef
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Post: #8
RE: Government spending = unemployment

debauchery Wrote:
Manufacturing = products

Manufacturing = finished goods


VineFynn Wrote:

yangusbeef Wrote:

VineFynn Wrote:

yangusbeef Wrote:

Are there exceptions to this? Like communism, for example.


This is a perfect example of correlation not equalling causation.

In fact, the opposite is true. Usually, unemployment = government spending. This is because as unemployment increases, the mandatory spending on unemployment benefits also increases as more people apply for it. Depending on government policy, other factors, such as subsidies, may also increase.

In addition, the size of government spending will also increase relative to GDP during times of economic bust, as the private sector will shrink whilst the government spending levels will remain the same.


Something has to fund it all.


That's true, but irrelevant to the original question. A moot point, if you will.

I was eluding to the point that as spending increases, due to the multiple points that helsworth mentioned, taxes increase and unemployment increases. Also, I don't think it debatable. Something indeed has to fund it all, and it will be the citizens unaffected by the bubble pop.

24.10.2015 04:59
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debauchery
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Post: #9
RE: Government spending = unemployment

yangusbeef Wrote:
Something indeed has to fund it all.

No. You'll make it because I'm taxing it.

Have you learned nothing? My god this is not hard! This is medieval!

get it together man, you're a knight of lord shang!

Quote:
Elimination of Strength
If the whole population is registered at birth and erased at death, there would be no people who would escape agriculture, and in the fields there would be no fallow land. Thus the country would be rich, and being rich it would be strong.

When the army is mobilized for an offensive, rank is given according to military merit, and reliance being placed upon the military, victory is certain. When the army is in reserve and agriculture is pursued, rank is given according to the production of grain, and reliance being placed upon farming, the country will be rich. If in military enterprises the enemy is conquered and if, when the army is in reserve, the country becomes rich, then it attains supremacy.

Quote:
Order to Cultivate Waste Lands
If orders are issued for the service of all younger sons, without exception, the service to last their lifetime, and no high palaces to be built for them, and if orders are given to the grain-measuring officials to weigh out their grain allowance evenly, and if on the one hand they are not used for menial services, but on the other hand they do not necessarily obtain high office, then the younger sons will not be idlers, and (this being so) they will certainly turn to agriculture; and if that is the case, then it is certain waste lands will be brought under cultivation.


   

This post was last modified: 24.10.2015 05:36 by debauchery.

24.10.2015 05:14
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Roger Mexico
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Post: #10
RE: Government spending = unemployment

yangusbeef Wrote:

debauchery Wrote:
Manufacturing = products

Manufacturing = finished goods


VineFynn Wrote:

yangusbeef Wrote:

VineFynn Wrote:

yangusbeef Wrote:

Are there exceptions to this? Like communism, for example.


This is a perfect example of correlation not equalling causation.

In fact, the opposite is true. Usually, unemployment = government spending. This is because as unemployment increases, the mandatory spending on unemployment benefits also increases as more people apply for it. Depending on government policy, other factors, such as subsidies, may also increase.

In addition, the size of government spending will also increase relative to GDP during times of economic bust, as the private sector will shrink whilst the government spending levels will remain the same.


Something has to fund it all.


That's true, but irrelevant to the original question. A moot point, if you will.

I was eluding to the point that as spending increases, due to the multiple points that helsworth mentioned, taxes increase and unemployment increases. Also, I don't think it debatable. Something indeed has to fund it all, and it will be the citizens unaffected by the bubble pop.


Not necessarily.

If the government is following basic Keynesian guidelines, then they're aiming for "counter-cyclical" changes in the public debt rate.

That is, during recessions they run up deficits (putting more money into circulation to stimulate consumer demand, compensating for the reduction in private-sector liquidity as lenders and consumers get more risk-averse), then when the cycle returns to a growth phase they implement austerity measures to pay down the debt (aiming to counteract the inflationary pressure of increased consumption and rising private-sector liquidity as lenders and consumers gain confidence and become looser with their money again).

So the theory is actually that the extra public money spent during the recession is effectively borrowed against the increases in taxpayers' income that will happen once the recession is over.


That all depends on the government actually following through on both phases of the process at the appropriate times, of course.

But, yes, unemployment typically goes up during recessions, so if GDP is shrinking at the same time, government spending would have to be precisely indexed to GDP changes (which it generally isn't) for that not to result in government spending/debt becoming a higher percentage of GDP even if the former doesn't actually change in absolute terms.


Money doesn't really "come from" anywhere, of course. It's just a unit of measurement of the value of commodities that are changing hands (or of potential exchanges planned for in the future, which is what the banking sector generally deals with), so money just circulates. It doesn't really come from one place and end up somewhere else. "Who is paying for this?" just means "who is reducing their current or planned consumption in order to offset other consumption taking place elsewhere?" (Assuming there's a policy in place of exactly offsetting every bit of consumption, which there often isn't.)

This post was last modified: 08.11.2015 00:45 by Roger Mexico.

08.11.2015 00:38
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