When Governments Cut Spending

When Governments Cut Spending


What history, and both recent history and
the most distant past history tells us is that bringing your spending under control
through budget cuts and stringency bears big dividends in the short term and the medium
term. Obvious case is Canada. Canada’s public finances in the 1990s were in a truly terrible
mess. They took drastic action. They imposed across the board 10 percent cuts when Paul
Martin was the finance minister in Canada under the Liberal Party government at that
time. The result is that now Canada has been very lightly touched by the current financial
crisis, and the Canadian public finances are in extremely good shape. Another example is Sweden, where various steps
were taken by both the nonsocialist and socialist government during the 1990s to address the
then-perilous state of the Swedish public finances. The result again is that now Sweden
has a large amount of money available. If it wants to spend money, it does not face
a prospect of either significant spending cuts or of major tax increases. On the contrary,
they’re looking to reduce taxes. They have room to maneuver. They can reduce taxes and
alleviate the burden on all new taxpayers. By contrast, countries and governments that
persist in excessive spending find themselves in the situation where they have absolutely
no room to maneuver, and they have loaded an enormous burden of debt repayment onto
future generations. There’s no historical credence to this very
popular idea, that cutting spending now will actually slow down the economy and actually
lead to a double-dip recession or an increase in economic stagnation. The U.S. after World
War II is a very good counter example. It’s hard to realize now, but there was widespread
expectations in the United States in 1945-46 that once the war ended and the military spending
came to an end there would be a return to recession or even the Great Depression. There
was a general expectation that all this government spending would simply lead to a collapse in
economic activity once it was withdrawn. In fact, as we know, exactly the opposite happened.
As the defense spending of the war years was wound down and government was pulled back
in other ways as well under the Truman and then the Eisenhower administrations, the result
was an enormous period of sustained growth in the United States and, indeed, in other
countries, which also went through a similar process. The evidence of countries that have made major
reductions in public spending, such as Canada, New Zealand, and a number of other countries,
is that in fact economic growth accelerates after major reductions in public spending.
And in some ways this is quite obvious, and it’s easy to see why this should be the
case. It’s because the money that would have been lent to the government or taken
by the government in taxation is now available for other purposes, productive purposes. There’s also the fact that people are more
confident about the future because they no longer fear future tax rises in order to pay
for the debt that’s currently being accumulated. And as such they’re more confident to make
productive investments and undertake activity that’s going to create more wealth. So there is no evidence at all, I would say,
that reductions in government spending are going to bring about the kind of effects that
many people argue for. And a lot of evidence, in fact, to the contrary.

100 Comments on "When Governments Cut Spending"


  1. @TheBlackKnight22 Government stimulus doesn't work (Japan has been trying it for 30 years). Well, it lines the pockets of political cronies, so in that sense it works. I agree with you about cutting military spending. We could easily cut that in half and still have the most powerful military in the world. We could then apply the savings to the federal debt.

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  2. @nannyberries Revenue for economic stimulus! The economy would have been a lot worse if not for the stimulus that was created, but only recently did we realize that it wasn't even large enough! Don't take money out of spending for the US and take it out of defense as I have been saying! Are you opposed to taking it out of defense are our you not catching that part? of COURSE I agree that there are pleanty of things that we can cut, like subsidies for oil companies, and we can help start a

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  3. @nannyberries green energy industry, the rest of the world is leaving us behind on this, green energy IS the new big industry that may bring America out of the dumpster, we need to invest back into the auto industry and into new technologies. The republican's are even against just CLOSING LOOPHOLES which would bring more revenue. The republicans aren't doing anything to bring back jobs to America, they want those jobs to go to China, so they can continue to play the blame game against the Pres.

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  4. @H1TMANactual

    Step 1: Buy a jacket.

    Step 2: Move to New Hampshire.

    Step 3: Enjoy your new liberties and work for more of them.

    Reply

  5. @nannyberries stimulus because without it for one the economy would have been significantly worse. And Places like China are getting ahead in green technologies because they know that you can't just keep sucking the earth dry and contributing to making climate change even worse.

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  6. One thing this guy forgets to mention is that after WWII the rest of Europe's manufacturing base was DESTROYED. The US was really the only country that could meet much of the worlds industrial needs.

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  7. @Hewhosmokeswomen If Europe produced nothing then how did American goods earn a profit? Either Europe was not poor or the goods were in fact purchased through US government loans, etc. The latter can only have happened if the US economy was productive in its private sector since such transfers are a form of welfare/consumption. If you disable your neighbor how can that increase your prosperity when he can no longer produce anything for you to purchase with your productive activity?

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  8. @ParadiddleMcFlam

    What Hewhosmokeswomen is saying that you seem to not understand is that their manufacturing base was destroyed and as it was rebuilding American exports were high, thus a mass influx of money (production and employment) to America. I am not a Keynesian in anyway but you got to admit that Europe's Keynesian policies of raising aggregate demand when they had a destroyed manufacturing base sure did help America.

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  9. @ihatemoses Raising aggregate demand? How did they do this exactly? Out of thin air? By printing money? If so why did Americans want that money? To buy nonexistent goods from Europe? The countries that received the least US aid grew the fastest. A mass influx of money does not create prosperity.

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  10. @ParadiddleMcFlam

    Wow, you really don't get it. Money is money. They can print money without causing hyperinflation. We're doing that right now. You don't see anyone saying "no" to the greenback. As Europe rebuilt it's economy it bought a lot of goods from America. I don't know about US aid and I wasn't even talking about US aid anyway. The mass influx of money came from exporting goods, not from a printing press. That's good money.

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  11. @ihatemoses You are the one who does not get it. Americans are exporting and getting what? Either European currencies and using them to buy European goods with dollars which came from Europeans who got them by selling stuff to Americans. You are incapable of explaining how Europe created anything to sell by means of "raising aggregate demand" which is a bogus concept to begin with. If americans could not buy any European goods then there is no demand from Europe to buy American goods.

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  12. I wish that the United States Legislative and Executive Branch watched this channel, then we would have a chance for a restored economy, more liberty, and more social justice; which should be a common goal among all politicians.

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  13. @TWSceptic

    It has everything to do with the topic at hand. Europe had little industry, thus it had almost no capacity to meet demand. The United States was the only country that could fully meet the demand of the world, because it was the only country whose production base wasn't bombed.

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  14. @TWSceptic
    It has everything to do with what he's pointing out. He's making references to numbers that are inflated due to factors much bigger than the slashing of government spending

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  15. As much as I hate comparing one country to another … I do agree we need our budget put under control. It's not just the spending, it's spending too much on things that really should not cost much at all.

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  16. i like how he uses these countries as good examples. they all have healthcare. which this channel is anti.

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  17. FUN FACT: For 30 years after WWII, the top tax rate was at 95% and all income levels increased and the economy thrived. In the 30 years since Reagan lowered taxes, the economy has tanked and income levels at the top increased way more than the rest of the people (and the people on the bottom actually had their income DROP.

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  18. Why does he talk about the economic growth that happened after WWII, supposedly to reductions in spending, but fail to mention that there was also a 95% tax rate?

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  19. hm that is true and interesting. However, the income tax for highest income earners hovered around 80% (average) during the great depression. That didnt get us out of the depression did it? No. Whats most important about this topic is the cutting of government spending. We cut spending, thats whats important.

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  20. I think it is also important to note that we redistribute the wealth more than China does and just as much as most european countries do… Why are they so much better off? Cause we spend more money than they do. simple.

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  21. For me, the tax rates in the US are fine. I would give the middle and lower classes more cuts cause they got screwed with the bailouts of the housing market and GM and Wallstreet. However, it is something to consider when our tax rate for 250,000 income earners is 33% while Germanys is 35%. The top 1% of the US pays for 22% of US taxes.

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  22. Wait what? Ahahahah you are actually suggesting that lowering taxes HURTS the economy? How? You do understand that there are non-government jobs out there right? For every government job you create via taxation you kill AT LEAST one private sector job.

    Also that 95% tax rate talking point you like to shit out is really dumb. Have you ever looked into it? Almost no one was in that tax bracket. No not even 1%. Way less than that. Its a red herring to identify uninformed people.

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  23. Also the corporate tax rate in the USA is THE HIGHEST IN THE WORLD.

    Think about that for a second next time you complain about jobs moving over seas.

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  24. Underfunded? Compared to when? We spend WAY MORE on education now than at any other point in our nations history.

    The reason education sucks in this country is because the government has monopolized it. There is no education market anymore so we see runaway costs and shortages. The best thing to do to help college students is to make government backed student loans illegal.

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  25. Yes I agree with you completely. The corporate tax rate needs to be lowered to bring jobs back home. I forgot about that tax.

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  26. Adjusted for inflation the amount we spend on education per student is THE HIGHEST ITS EVER BEEN IN ALL OF AMERICAN HISTORY. Sorry if you don't like that FACT because it makes your look incredibly stupid but thats your problem not mine.

    Don't believe me? Look it up. I fucking dare you.

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  27. Actually Norway ranks 4th on the list for most money spent on education per student. Want to know who ranks 3rd on that list? Take a wild guess.

    Here is a hint: It starts with a U and ends with an A.

    Just curious who convinced you that a lack of funding was the problem with our education system? It's a complete myth and it needs to end. There are countries out there spending HALF what we spend per pupil and getting way higher test scores (Israel for example)

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  28. # 1 Denmark: $6,713.00 per student
    # 2 Switzerland: $6,470.00 per student
    # 3 Austria: $6,065.00 per student
    # 4 United States: $6,043.00 per student
    # 5 Norway: $5,761.00 per student
    # 6 Italy: $5,653.00 per student
    # 7 Sweden: $5,579.00 per student
    # 8 Japan: $5,075.00 per student
    # 9 Israel: $4,135.00 per student
    # 10 Australia: $3,981.00 per student

    Those numbers might be a couple years old but its the most recent I can find. What do your make believe PHD's say the numbers are?

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  29. google "per pupil spending by country" I DARE you to do it and tell us what you find. hahahha

    Face it, the USA spends more per pupil than 99% of the planet. We are not at the top of the list but we are easily in the top 5. You seriously think more money is the answer? Are fucking kidding me?

    And look at the states themselves. California has the highest paid teachers in the country by far, and is at the top of the list in education spending. Its public school system is HORRIBLE. Why?

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  30. Lol what? I FUCKING DARE YOU to try and google this information. Try looking up the National Center for Education Statistics (nces ed gov) , Organization for Economic Co-Operation and Development (OECD), Reuters, or even just worldbank org. EVERY ONE OF THESE will tell you that the USA is among the highest in the world for education spending (about 4th place) Let me see your source that says we are last. You mentioned "dozens of economic textbooks and PHD's". Name ONE. I dare you

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  31. FUN FACT: You've bought into the liberal propaganda! This is going to be a multi-part beatdown, so prepare yourself. If you've become more educated in the month since you posted this retarded comment then you may disregard this or choose to laugh at your fairly recent stupidity. Otherwise, now's as good a time as any to learn. Let's move to Part I, shall we?

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  32. Ahhahahah. Ok lets pretend we are retarded and think the top tax rate is what causes economic growth.

    FUN FACT: in the 19th century our economic growth was MUCH HIGHER than in the 20th century and our income tax rate was 0%. It didn't even exist! How do you account for this MASSIVE growth?

    Are you saying we should go back to 0% taxes so we can have MASSIVE gains in wages and GDP like we had in the 1800's? Is that what you are telling us?

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  33. Name ONE journal that says the USA spends less than everyone else on education. I FUCKING DARE YOU. Name one. Just one.

    YOU CANT BECAUSE THEY DON"T EXIST

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  34. How do you give someone a tax cut if they are currently paying zero dollars in taxes? 100% of the lower class, and 50% of all the people in the entire country combined pay ZERO dollars in taxes. How do you give them a tax cut?

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  35. Because that 95% rate was not on "rich people" it was on the highest of the high (less than 1% of the population) and quite literally, no one paid that 95% tax rate even if they did qualify for it. There were MASSIVE deductions and loopholes back then. There were multi-millionaires paying ZERO dollars in taxes because of those loopholes.

    The tax rate was lowered when they closed all the loopholes because with the loopholes gone they could collect much more money than before with a lower rate

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  36. Part I: The highest marginal tax rate the United States has ever seen was 94%, not 95%, and it lasted from 1944-1945. 30 years, huh? It then fell to 91% and stayed there until 1963 (barring two years at 92% from '52-'53). It then tumbled to 77% in '64 and further to 70% in '65. So, we're already 25% below your claimed rate a mere 20 years out of the 30 you said it remained flat. It remained there until 1982, at which point it declined to a still ridiculous 50%.

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  37. Part I (Cont.): Reagan lowered it to 38.5% in '87, and then lastly to 28% in '88, because he realized it was retarded. It has never been lower than at that time. Now that we've totally disproved your historical timeline, let's investigate whether the effective tax rate was anywhere near the top marginal rate during these years. The answer, I'm afraid, is no. Not even close. The amount of loopholes, deductions, and outright cheating (lying, hiding funds) in the 40's-80's was enormous.

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  38. Part I (Cont.): Total tax revenue as a percent of GDP under Reagan when he first entered office was 32.48% of national GDP. When he left office, it had RISEN to 32.86% of GDP. Now we begin Part II of your education process.

    Part II: Total GDP when Reagan assumed office was $3.1 trillion. When he left, a mere eight years later, it was $5.1 trillion. Yes, that's right, our national GDP increased by a whopping 65% during his time in office.

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  39. Part II (Cont.): You say that in the "30 years" since Reagan lowered taxes, our economy has tanked. Let's analyze this even further. Not only are you predicting the future (30 years out would put us at 2017, again showing your irrefutable knowledge of history), but the GDP has actually grown from $4.7 to $15 trillion (as of 2011) since his tax cuts (which have partially been reversed). So, more than tripling our national GDP in less than 25 years equals a tanking economy in your eyes?

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  40. Part II (Cont.): So, with Reagan's 65% economic boost during 8 years in office, that surely must compare unfavorably to your golden age during the 50's, no? Well, in fact, the economy increased only 57% during the first eight years of that decade. Now that this is all blowing up in your face, let's take a moment to decimate your third and final claim.

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  41. Part III: I'm not going to deny that income inequality has increased since Reagan took office, because that's not true. It has. That being said, think about why that may be. The vast majority of those with high incomes are smarter and/or harder working than those with lower incomes. Intelligence and willpower are largely heritable traits, so it's only obvious that those with large fortunes to leave to their genetically advantaged children will see their family fortune rise at a faster rate.

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  42. Part III (Cont.): That being said, each and every class chunk of the population has experienced economic growth during this late period in our history, even after accounting for inflation. Furthermore, the quality of something that $100 inflation adjusted dollars could buy decades ago is absolutely abysmal to the quality of an item that $100 can buy today, meaning that overall living standards have drastically increased during this period in history, despite the poor having a smaller percent.

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  43. Conclusion: Please don't run your little liberal mouth when you don't have facts to back up your statements. It's sad, really, and is reminiscent of a creationist trying to debate someone who understands evolution. The only irony is that you liberals are all big on biological fact (usually), while you can't for your lives seem to understand economic fact. Good day, and please try to better yourself rather than bitching like a liberal bitch in the future. I wish you the best!

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  44. Its the people who are working who will get the tax cut. There are people in the lower class who work. Keeping your money should be incentive enough to work.

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  45. Places like Isreal or Hong Kong spend almost half what the USA spends per pupil and have test score much higher than ours. I think you touched on it, but there is a reason why there is ZERO correlation between money spent and quality of education in the USA (this correlation may exist in other countries but it doesn't exist here). Why? The money goes to fund corrupt unions at the EXPENSE of students.

    That's pretty much it.

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  46. Revenues to the gov remained about the same before and after the tax changes. ~18% of GDP. The goal is to grow the economy, not simply 'take more of whats there'. You get a lot more 'revenue' from taxing 100 working people @ 10% than you do taxing 10 working people @ 50%.

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  47. Eisenhower had huge public spending, the highways were the biggest public project ever. He was a moderate, who left a lot of new deal programs in place.

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  48. However what did the highways allow? Much easier transportation of goods between locations, and the increase in the amount of travel individuals could do in shorter spans of time. For example, the closest Best Buy to me is about 15 miles away. I could use city streets to get there in 40 minutes to an hour, or hop on the freeway and get there in half the time. Allowing me to be more productive.

    Moderate or not, Highways should be considered "productive" spending, and things such as Welfare, not.

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  49. Spending is spending. That is not an example of a free market, and private roads would be equally, if not more efficient. What you are saying is that we should remove gov from our lives, but then add them back in. Fuck the gov, let's get them off our back, and end interventionism. "The policy of the American government is to leave their citizens free, neither restraining nor aiding them in their pursuits."~Thomas Jefferson. You also brake article 10 of the constitution with your ideology.

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  50. Wait, what? Look im hardly a liberal. Regardless of the amount of spending it took, im not going to ignore that the military felt it necessary to put in place a large road system to quickly move large amounts of military assets from one place to another due to Russian threat. They then allowed the citizen to use that road system until it needed to be used otherwise. Highways improved the flow and growth of our economy, stimulus didnt. Productive spending to Wasted spending. There's a difference.

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  51. Also, since its the federal military, it doesnt violate the 10th amendment. Thank you.

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  52. You're suggesting that private entities would be better off maknig a network, I dont disagree. However, the federal government would still go through them to produce such a network because their original intention during the growing intensity of the cold war was to move the military, quickly, from one place to another

    Government doing something useful, by improving the defense of the nation, is oppressing me because it takes away people's freedom to own the land the road occupies? We're Screwed

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  53. roads don't help defense. i understand your point that roads help defense, but the fact that it has to or should be gov makes no sense. whenever you do something for someone you are taking the freedom of the person to do it themself

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  54. So then explain to me how a representative government is supposed to function with your ideology. We arent a Democracy, we're a Republic, there's a fundamental difference. We vote on policy that our representatives create, and national defense doesnt violate the 10th.

    Roads helped the speed to armies move vast distances much more quickly than without. Shall I use Rome, Inca, and Napoleon as an example in that regard? Highways were a positive externality of REPRESENTATIVE government.

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  55. First off, i never said defense violated tenth, I said that aid did. secondly, what you are allowing with your representative gov is tyranny of the majority. That's why there are rules and limits: the constitution. Even if majority of citizens want it, gov still can't do it under law. this is to protect the patriots who fight their gov. (thomas Paine).

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  56. We don't vote on policy. We have no real say on policy. We vote for "representatives".

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  57. Ironically, right after the Great Depression that is what Keynes said about the previous form of economic governance.

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  58. We've been practicing Keynesian economics since 1930…that means FDR was wrong, Truman was wrong, Eisenhower, Kennedy…all of them wrong. But know, you Austrians know best. The economy will shrink with higher taxes and higher spending, despite the fact that average GDP growth was above 3%, with the exception of the oil crisis in the 70s (that lasted a few months), and then of course, the coming of trickle down. Which caused a recession, and the wave of deregulation that caused the recession.

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  59. In fact, if you look at the 1920s, there were significant cuts to both taxes and spending. Did this do anything to stop the depression? You can say all you want, but taxes went from the 70% level for the highest strata to only 22% at one point. Spending was cut so bad that enlistment incentives were frozen (thus creating the 'bonus army').

    Does this prove that the whole basis of learn liberty is flawed? No. But the answers aren't so black and white as they would portray to you.

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  60. Well, to be fair, Keynes was correct in the short term (relatively speaking), but very wrong about the long term effects. Fractional reserve banking works very very well… for a short while, just before the collapse. It's kind of like a drug: at first you feel amazing, then you start to feel worse so you up the dosage, then you have to take as much as possible just to feel normal… then you die.

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  61. I will read it, sure. Depending upon their sources, I may or may not take it with a grain of salt.

    That being said, if I should read that, then read about the Mellon plan, and how for the decade before the depression, we were becoming increasingly libertarian in regards to our tax policy.

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  62. You will borrow a grain of salt, when reading about an actual event in history? I would just like to note, that the Mellon plan isn't a paper in support of a policy…it is actually something that happened in our history.

    So that being said, you could totally read it, and come out even more in support of lower tax rates. Or you could come in support of higher tax rates. Neither of which is my actual intention.

    I mean to show you, that lower tax =/= economic growth, as shown by US History.

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  63. What the fuck are you talking about? So your saying the Mellon Plan didn't happen? That is like saying Pearl Harbor didn't happen, or that you were never born. The GDP decreased as a result, before collapsing entirely in 29. These are facts, everyone on all sides agrees with the fact that the Mellon Plan happened, the GDP decreased, and the depression happened.

    You can argue causality, but your idea that these are not 'actual facts' makes you look idiotic at best.

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  64. The Mellon Plan decreased taxes, portionally, but also cut spending drastically. This caused a budget surplus, where there was a deficit. Thus, yes revenue went up.

    However, I stated, that the GDP decreased. I stand by that. GDP= C + I + G; Econ 101. Mellon cut taxes which would increase C. However, he cut spending even further which would decrease G more than his increase to C was. Therefore, he reduced the GDP.

    So again I say, disprove me. These are facts. Your assertions are just that.

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  65. In America we have the power to create dollars in paper or data. The government creates it, spends it and then should destroy it.

    No inflation created and people go to work and things get down.

    If we don't spend we can't create anything. But we don't really need dollars to create at all. I know thats hard to understand.

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  66. The great depression was created by the bankers. The people were here, the factories were here and the resources were here so what was the problem?

    No dollars/paper.

    Were kind of dumb about this paper thing.

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  67. Any reduction in spending by both Rep or Dem is actually a reduction in the amount of spending, not actual cuts. It's like you make 50 K per year and spend 70K per year ( 20K on credit cards). And you agree to only spend 60K per year ( spending 10K per year on credit cards). Its sad we are headed for a Greece disaster

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  68. The fed made it worse by choking off the money supply and the government made it even worse by bringing in tariffs.
    A great combination –does it remind you of 2008?
    Except this time the fed just printed money + caused inflation

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  69. WE NEED PRESIDENT SARAH PALIN! SHE WILL END ENTITLEMENTS ALTOGETHER AND MAKE DRASTIC CUTS WITHOUT RAISING ANY TAXES! SHE WILL CUT TAXES EVEN MORE ACROSS THE WHOLE BOARD AND THE ECONOMY WILL SKYROCKET LIKE NEVER BEFORE WITH PALINOMICS!

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  70. In “Inheriting an Abundant Earth” a simple rule tweak on inheritance ends up changing the direction and purpose of modern human life! It's something specific we can demand. Are we really just this close to having it work right? Oh yeah, it's a Ski movie! Watch “Inheriting an Abundant Earth” on Youtube (“Occupying Chairlifts” 5.0) then sign the petition, and share it!!

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  71. Romney's budget was projected to be MORE than Obama's!!! THEY BOTH need to watch this entire playlist. I can't believe that politicians don't know this stuff. It takes just a few hours to watch all of these videos and they have changed my life. This is their job. I can't understand why hardly any big politicians know anything like this… Depressing.

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  72. Money is like gravity. It has a tendency to pull towards itself. It is inevitable that the dollar will find itself in the hands of the view, due to the abstract value placed upon it.

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  73. Something this dude fails to mention is that in 1946 the people at the top of the food chain were paying 91% income tax. We paid our war debt back and THIS is how we paid to do all that awesome stuff the US is famous for e.g. land on the moon. Currently, these same people pay a lot less and the debt will be repaid at great detriment by everyone under 25 right now. This is future crime. How much money do you really need people?

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  74. Tell that to the union thugs who've bankrupted Detroit through 50 years of leftist mayors.

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  75. people need to understand economics before they start talking about government spending…Everyone thinks that capitalism is gods give to the earth. but most people don't even understand it…the just believe the propaganda republicans throw out there….and dems are dumb cuz they don't know how fix the problem so they just tax…do me a favor..watch a few vids about the downside of capitalism so you can make a well informed decision on where you stand…

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  76. Capitalism is not god's goft to earth but rather man's gift to himself and many of the "downsides" of capitalism can be explained in two ways. 1: inertia with regards to advances in the standard of living (thus child labor, initially poor working conditions, etc.) and 2: cronyism (government handing out favors to special interests such ad the Credit Mobilier, Erie Ring, the CP and UP railroads, and several early factories).

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  77. Indeed, the US is not the country to point to when discussing the merits of capitalism because the US has always given in to one special interest group or another which has inevitably triggered regulation and tax after regulation and tax while still allowing favors to special interests. I would probably point to countries like the Scandinavian countries before the 50s or to Hong Knog before its transfer back to China.

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  78. Canada also has a much more regulated banking sector than the USA has. The 2008 crisis was not some nebulous "event" that happened to economies. A few distinct things blew up. A huge part of that was in how the banking sector operated. Canada's banking sector did not have the same problems that a lot of the more seriously affected countries had. So Canada did better.

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  79. i'd hardly use post WWII us economy as an example of cutting spending to spur growth, since industry in the US had virtually no world wide competition as many of the combatants' base of industry were almost totally destroyed. The Marshall Plan WAS the way gov't spent. Much of the money going overseas eventually created markets for our goods there and so that was what created the post war boom. Not sure I buy this thesis..i mean if in recessions private individuals don't spend, and corporations don't spend, if Gov't doesn't spend, nothing moves. 

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  80. The 2min52 vid "Why Do Banks Make So Much Money?" – the 3min19 "How money gets destroyed – Banking 101 (Part 6 of 6)," – the 4min20 "Could These 3 Simple Changes to Banking Fix the Economy?" and others by Positive Money UK.

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  81. The examples are cherry picked, there is far more historic evidence showing the failures of austerity than the benefits. The reasons Canada and Sweden were not hit so hard by the crisis are unrelated, the crisis had nothing to do with government spending. Here’s a maths puzzle for you. You have a debt to GDP ration of 4:5. You cut government spending which is a component of aggregate demand which is equal to GDP. No you have a ratio of 5:5. Are you now in a worse position of pay of debts given that the ratio has risen from 80 to 100%? I’m not saying you should never reduce government spending, but the worst time to do it is in a crisis or recovery from one.

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