Saturday, August 20, 2016

The Carnival Continues

As democratic governments continue to try to stretch the bounds of human depravity, we take this moment to point out some of the absurdities of today's social order.

According to the OECD  the United States' government spending was 38.1% of GDP. What this means, of course, is that the United States government was responsible for 38.1% of the consumption in the economy. Whether the money was being either shuffled around at gun point or simply created from nothing, it doesn't matter. The money was being spent by people who did not have to do anything to obtain it. Think about that for a minute: at least 38.1% of spending was performed by people who didn't earn the power to dispose of that purchasing power by creating something of value.

Of course, GDP equations are nonsense. Just assuming government spending adds to economic output at a 1:1 ratio along with all other spending is an assumption we just can not accept. We would not accept the idea that spending necessarily adds to social welfare. If that spending does not come along with its naturally associated cause, production and savings, then it is pure consumption with no productive value. Not all decisions are created equal, and not all resource expenditures are desirable from a long run perspective. Only decisions which are sound and not wasteful in the long run are those which actually qualify as wealth producing decisions.

We don't really understand how governments and central banks think these kinds of conditions are sustainable. We are pretty sure they don't believe this: they simply must continue the charade as long as possible.

One thing we are certain of, is that until humans are willing to allow the social order to evolve as it naturally must, the discovery process of trial and error inherent to economic calculation can not function. We are optimistic that some day this will happen, but right now the belief in authority is consolidating its position.

1 comment:

  1. Good article, you nailed it. Plus government spending is a component of the GDP equation. When we say the government spent 38% of GDP that means the private sector comprises 62% of GDP. Now lay those alongside one another and you realize government is spending $2 for every $3 of economic output produced by the economy.


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