ilduce349
(Financial, Philo)
This isn't as off topic as previous posts, since this is debating the justification of certain game mechanics in one of TFs IOTs.
In any case, America is, to my knowledge, the only country in the world that funds transfer payments through deficits. Most European countries and Canada funded them through transfer payments.
How transfer payments are suppose to work is that the government requires people to forgo a small percentage of their income, and the company they work for is suppose to match their contribution. The government is then suppose to invest that money in treasury bonds, and when the person becomes either unemployed, retired or gains a disability, he will start getting payed based either on his contributions (ifs its a DC plan) or a certain percentage of his previous salary (if its a DB plan). This is why all economists (with exception to those who are also journalists) do not consider transfer payments to be part of government spending. Transfer payments are essentially the government forcing people to save (which causes a decrease in AD).
Now in Americas case, starting with Nixon (pretty sure it was him, but could be misaken), the government started using the social security savings as another account for the government to use. Over the last 30 years, the government has taken 6 trillion dollars out of the social security account to fund other government programs. As a result, social security can't be funded through transfer payments because it has no money to transfer.
Transfer payments cause, by definition, a decrease in AD and even if they didn't, they shouldn't be considered infrastructure investment.
http://www.forbes.com/sites/billfla...rugman-wwii-did-not-end-the-great-depression/
Government consistency and policies that promote long run growth are far more important then shortening the business cycle. As long as there is a relatively free market the long run gdp will increase, governments adding laws or raising taxes (unless its to pay off debt), increase uncertainty in the market and will harm economic growth.
The free market can because with competition and a price system it is clear based solely on profit margins, where resources are being efficiently used based on the demands of the consumer. Profit can only be made by theft, fraud or giving the consumer what he wants.
People often think that libertarianism is anarchy. its not, the government has the responsibility of protecting the people from fraud or coercion , the courts, the police and national defence should be the main responsibilities of government.
That depends on which part of the business cycle we're in. During a boom, higher deficits cause higher inflation, in a bust then yes deficits can be a good thing to temporarily stimulate the economy. But again this is a long run vs short run debate. Deficits in the long run will always lead to either inflation or lower business investment in the economy. Deficits also promote misallocating resources.
In any case, America is, to my knowledge, the only country in the world that funds transfer payments through deficits. Most European countries and Canada funded them through transfer payments.
How transfer payments are suppose to work is that the government requires people to forgo a small percentage of their income, and the company they work for is suppose to match their contribution. The government is then suppose to invest that money in treasury bonds, and when the person becomes either unemployed, retired or gains a disability, he will start getting payed based either on his contributions (ifs its a DC plan) or a certain percentage of his previous salary (if its a DB plan). This is why all economists (with exception to those who are also journalists) do not consider transfer payments to be part of government spending. Transfer payments are essentially the government forcing people to save (which causes a decrease in AD).
Now in Americas case, starting with Nixon (pretty sure it was him, but could be misaken), the government started using the social security savings as another account for the government to use. Over the last 30 years, the government has taken 6 trillion dollars out of the social security account to fund other government programs. As a result, social security can't be funded through transfer payments because it has no money to transfer.
Transfer payments cause, by definition, a decrease in AD and even if they didn't, they shouldn't be considered infrastructure investment.
And the great depression ended in 1946. WW2 didn't end the depression, it ended unemployment, but consumer spending and buisness investment, and total GDP, was lower during WW2 then during the 30s.
http://www.forbes.com/sites/billfla...rugman-wwii-did-not-end-the-great-depression/
Only if the government has run high deficits in the past. Overall though I'm not subscribed that that Keynesian belief.
Government consistency and policies that promote long run growth are far more important then shortening the business cycle. As long as there is a relatively free market the long run gdp will increase, governments adding laws or raising taxes (unless its to pay off debt), increase uncertainty in the market and will harm economic growth.
Agreed
Thats not the only reason, the biggest reason is the government cannot know everything about everyone, as could never know the most efficient way to allocate resources.
The free market can because with competition and a price system it is clear based solely on profit margins, where resources are being efficiently used based on the demands of the consumer. Profit can only be made by theft, fraud or giving the consumer what he wants.
People often think that libertarianism is anarchy. its not, the government has the responsibility of protecting the people from fraud or coercion , the courts, the police and national defence should be the main responsibilities of government.
Fair enough, but as I said, yours is the best economic simulator I have seen in IOTs, I just don't like how you presumed transfer payments is considered infrastructure.
