Political online game and economic simulation

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.

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.

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

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.

Manufacturing = finished goods

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.

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!

debauchery Wrote:

Manufacturing = products

Manufacturing = finished goods

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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.)