Global economic crisis looms - thanks to Bush

[el freako]

Originally posted by SpencerH

Which doesnt state how they arrived at the figures.

Blimey you're lazy, why not try looking around their site?

Originally posted by Kidicious
Are you honestly saying that if the US taxation was 59.3% that 73% of our working age population would be employed?

No, my quoting of those statistics was in response to Diplomat saying that bringing US taxes to european levels "would devastate our economy causing huge unemployment."

I was just showing that high taxes need not lead to mass unemployment.

[Kidlicious]

Originally posted by el freako
No, my quoting of those statistics was in response to this Diplomat saying that bringing US taxes to european levels "would devastate our economy causing huge unemployment."

I was just showing that high taxes need not lead to mass unemployment.

But the US already has high unemployment. Raising taxes or even doing nothing about it certainly would cause mass unemployment.

[el freako]

Originally posted by Kidicious


But the US already has high unemployment. Raising taxes or even doing nothing about it certainly would cause mass unemployment.

I'm surprised at you Kidicious!

'certainly cause' ?

Between 1990 and 2000 the US tax burden rose from 32% to 35% but unemployment fell from 5.6% to 4%

[SpencerH]

Originally posted by el freako


Blimey you're lazy, why not try looking around their site?

No I merely followed the link that you provided. The essence of the second link is that the figures originate from the source country and dont appear to be standardized in any way. As we've already discussed, everyone uses there own definitions. Therefore, comparisons between countries are meaningless and the variations in the unemployment rates between the USA and the Euro countries (that were posted) insignificant.

[Spiffor]

The American deficit-spending is doing more for international growth than a conservative fiscal policy. You don't imagine all these missiles, ships, planes etc. have a production process 100% American, don't you?

The increasing weakness of the dollar is only quickening the structural change in the world economy, that will end up with both the Euro and the Dollar as competitive reserve money. The restrictive monetary policy of the EU (and the fact that we keep to it despite a completely unadequate weather) is indeed solely intended at making the Euro a money as trustworthy as the dollar.

As such, yes, the massive deficit spending threatens the world economy as it is today. But it's very possible tommorrow's world economy will be better.

And lastly, the IMF talks out of its rump: a 40% debt has nothing exceptional. EU's stability pact considers 60% to be acceptable.

[SpencerH]

Originally posted by el freako

I was just showing that high taxes need not lead to mass unemployment.

The critical phrase there being "need not"

[Kidlicious]

Originally posted by el freako


I'm surprised at you Kidicious!

'certainly cause' ?

Between 1990 and 2000 the US tax burden rose from 32% to 35% but unemployment fell from 5.6% to 4%

That is a different case. The tax burden could be increased because of the increase in private investment and consumption. A growing economy allowed it. Now that private spending and confidence has fallen the economy needs stimulus.

[el freako]

Originally posted by SpencerH

No I merely followed the link that you provided. The essence of the second link is that the figures originate from the source country and dont appear to be standardized in any way.

I apologize, the old edition of that file had the definiation of the standardized rates as well.

The OECD uses the International Labour Organization's definition of unemployment that a person is unemployed if "they have actively sought work in the last four weeks, or if they are waiting for a job to start"

Originally posted by SpencerH
The critical phrase there being "need not".

Precisely, all those assuming that higher taxes always lead to higher unemployment are therefore incorrect.

[el freako]

Originally posted by Kidicious


That is a different case. The tax burden could be increased because of the increase in private investment and consumption. A growing economy allowed it. Now that private spending and confidence has fallen the economy needs stimulus.

How is it a different case? has the US economy stopped growing now?

[Kidlicious]

It's monetary policy, not fiscal policy, that truly determines the value of the currency. In the 80s the Fed tightened the money supply to counteract the fiscal stimulus. That's what prevented the inflation of the 70s. The Fed will do the same thing in this decade if the value of the dollar becomes a problem.

[Kidlicious]

Originally posted by el freako



How is it a different case? has the US economy stopped growing now?

The economy isn't growing fast enough to reach full employment on it's own. The 90s were a special case. New products and technologies increased consumer and business spending. We can't expect that to happen in this decade. It will only happen by chance.

[el freako]

I disagree.

I think that growth above trend (3% to 3.5% for the US) will happen for a good few years in the US.

I think that it will be mainly export-led and that taxes will have to rise in the late 2000's.

As such the recovery will feel less like a boom than the statistics show.

[Kidlicious]

Originally posted by el freako
I disagree.

I think that growth above trend (3% to 3.5% for the US) will happen for a good few years in the US.

I think that it will be mainly export-led and that taxes will have to rise in the late 2000's.

As such the recovery will feel less like a boom than the statistics show.

If this happens it will be due to fiscal and monetary stimulus and a weak dollar. Still the growth rate that you mention will not create full employment in the short run, because of the improvements in productivity and increase in capacity of the 90s.

[Urban Ranger]

Originally posted by Spiffor
And lastly, the IMF talks out of its rump: a 40% debt has nothing exceptional. EU's stability pact considers 60% to be acceptable.

But the US also has an gigantic national debt.

[Spiffor]

Originally posted by Urban Ranger
But the US also has an gigantic national debt.

Indeed, that's what the US economy should really worry about. When the State itself has a huge debt, there are always possible workarounds. When the whole society is strongly indebted, any significant crisis can become a panic, similar to the 1929 one.