Red Ink Since Dems Took Over Congress Greater Than All Previous Deficits Combined

Trog...

Submitted by CobraMan on Tue, 02/15/2011 - 4:12pm.

Trog, the economy in the 30's. was based upon the growth, delivery, and processing of agricultural products prior to the 40.  Just about everything, from manufacturing, to construction, to services, was directed towards supplying the needs of an economy based upon agriculture. That is why so many people lost their livelihoods in the Great depression, because most agricultural business's lost so much money.  Even our manufacturing was based upon an agricultural economy.  That's why, for example, so much production was geared towards agriculture, like tractors, combines, produce trucks, ect. 

The figures you supplied was ONLY for the actual production of agricultural products.  It doesn't include the various agriculture support business that existed in the 30's  You have to remember that the vast majority of the people, business, and the like, were directly supporting th growth, harvesting, processing, and delivery of agriculture, both domestically and abroad. Jut think about all those "ma and pa" stores that offered those agriculture products in every sing town, city, ect.  Think about the international and domestic harvesting, processing, shipping ect, that was SO labor intensive prior to the 50's when high-productive manufacturing exploded in America.  Agriculture required the majority of America's labor force.  That makes it an agriculture based economy.

It was after WWII , that we began to switch from and agriculture based economy to a manufacturing based economy.  Because of that highly productive manufacturing, the ability of agriculture to produce more with less manpower requirements increased to such an extent that the majority of laborers were no long employed in the agriculture sector, ether as direct laborer or support laborers. Once the majority of the labor forced switch from supporting agriculture to supporting manufacturing of, dare I say it, luxury items like tv, radios, telephones, ect, the economy switched from an agriculture based economy to a manufacturing based economy.

"Why should a service based economy be less productive? "

It all depends on labor needs versus production potentials. How much service can a single person produce, as opposed to agriculture or manufacturing?  You can't mach the production of agricultural or manufacturing in a service based economy.  The manpower requirements are far too excessive.  That's why Government, the most labor intensive service imaginable, is also the least productive service imaginable. 

Look at it this way:  One farmer can grow enough food in one year to feed over 1,000 people.  One assembler can produce enough to provided cars to over 5,000  people. One insurance agent can only provide service to, at the most, 600 people in a year. So, you tell me, which is the labor intensive, least productive economy?

"Please elaborate."

Ok, here's how it works:  The greater the production of a given economy, the more MONEY (wealth) that economy produces, and the less dependent that economy becomes on the government.  Government spending isn't dependent upon production, but, instead, upon need.  As production increase, that need doesn't  increase proportionally to that production.  It's the other way around.  As an economy produces more and more, the needs of the government to support that economy, and the society that produced that economy, decreases more and more.  You see, the government only needs to marginally increase support for a failing economy, not a prosperous one. The prosperous economy will take care of itself. There comes a point where government spending, and the cost that spending incurs on the economy (though increased taxes), is a liability and not an asset, both economically and on society as a whole. We have LONG reached that point. Government spending is a liability on our economy AND our society as a whole, a TERRIBLE liability that can not be sustained.

"I don't think there is an objective measure of what a government needs to spend."

Trog, even in government there is such a thing as declining investment potential.  Once a certain point of spending is reached, the utility of any system, that system's ability to produce more than it consumes, whether it be business or government, decreases no matter how much you increase investments. At current levels of production, the "investments" of government to support our economy shouldn't exceed more than 5 percent of GDP for the majority of that GDP, the "money" the economy creates as wealth,  is NEEDED to support the people who supply the labor, and the demand, for that very production.  The more money the government removes from the GDP through taxes, the less labor that GDP can support. 

As labor decreases, so does production. As production decreases, so does the ability of a manufacturing economy to support itself. As production falls and labor is lost, prices rise, wages decrease, and the more the government interferes by ether raising taxes or deficit spending (which only prolongs the problem for several years), the worse the problem becomes. This is why, even after the government has spent several TRILLIONS of dollars in "stimulus" the last three years alone, labor is STILL declining and production is STILL dropping. Prices continue to rise even though demand has dropped, all because the government is on a spending spree, one that our economy can not afford, and it is increasingly harming production. The more the government spends, the worse the situation becomes.  That that is because the governess is DECREASING the GDP through the reallocation of wealth that has already been produced, not increasing GDP through increased production compatibilities matching increased demands. 

You see, the government isn't a wealth producer, it is a wealth CONSUMER. After reaching a certain point of consumption, the more the government consumes wealth, the greater the deleterious effect that consumption has on everyone else.

Right now we're  at about ten percent of GDP as government spending and we're in a RECESSION.  We're in a recession BECAUSE of that excessive spending not in spite of it. Increasing government spending to a higher percentage of GDP will only accelerate the recession. It can't reverse it as it is interfering with the labor force itself.  JOBS are being lost at a far greater rate than any amount of government "investments" though increase spending can ever replace.  The only way labor and production can increase is if the Government stops taking so much of GDP as taxes and wasting it in non-productive spending. 

WE have to DECREASE government spending, decrease government consumption of wealth, to a level that our economy can support, around 5 percent of GDP, as that is really all the "excess" wealth our nation produces right now. 95 percent of our own wealth is needed to support our own lifestyles, to purchase the very products that we produce which, in turn, supports our own economy.

As it stands, the very people who produce the very products that create our manufacturing economy can't even afford to buy the products they must produce to create the very labor needs they supply. We can't afford the very products we need to manufacture in order to create the jobs we need to survive.  This is having the effect of lowering demand, which, in turn, decreases labor, which, in turn, decreases wealth.  It's a vicious cycle, one that is accelerating, and all because government is demanding far more of our self-generated wealth that we, as an self-producing economy, can support.

We can't count on export any more because more and more of the world's economies are become manufacturing economies themselves and they don't NEED our production capabilities any more,  They supply their own production capabilities now, so we can't rely upon exports to generate wealth, to generate income. We can only rely upon our own consumption needs in order to create the production/labor requirements our citizens need to survive.  We can only rely upon ourselves.  That leaves very little "excessive' wealth available for our various governments to spend, especially at the federal level. The more the government demands of our manufacturing production wealth, the less we have to support the very labor force that created not only the demand but the production of that manufacturing. Do you understand?

I must stress this point: The government needs to DECREASE spending (and the tax demands that spending incurs upon us all) to no more than 5 percent of GDP, which is all we can afford due to declining export capabilities. Then, and only then, will we have a lasting, productive, viable economy in a world where manufacturing is quickly become the standard economic system.

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