View 698 Friday, October 28, 2011
The financial news is simple: Europe will bail out Greece, and count on Greece to bail out Europe. Everyone basically bails water out of another country into their own, trusting that their “partners” like the Greek public service workers, will do their share and a bit more, and all will be safe together. The record doesn’t show that happening, but this time for sure.
Meanwhile we are told that the remedy to the Depression here in the United States is more public service employees whose average salary is above the national average. The median annual income in the United States is about $50,000 per household. The average wage of Federal public service workers is about $50,000 a year; of the average state worker about $48,000; of the average private sector worker about $45,000. Note that these are salaries and benefits for individuals, which argues that the $50,000 household income is an underestimate, but perhaps not given the unemployment rate and the different information gathering techniques. Below about $50,000 a year household income medians tend to be about equal to wage medians; the simplest way to raise household income is to add wage earners to the household. Of course that often leads to increases in the number in the household and the reduction of the number of wage earners.
Note that the emphasis is always on raising taxes and spending more, not on cutting the ever-growing spending and debt. Only there is no one ready to bail out our boats, and many of those around the world are bailing theirs into the US boat, if I may be permitted a metaphor.
There are those who resent my using metaphors and analogues.
"Exponential"
It is not "Exponential" Get out your old Algebra I text.
Dan
Dan Richie
I have several letters protesting that the growth of US spending and debt is “not exponential.” Depends I suppose on what you call exponential. Not, it’s not a smooth exponential curve. It has fits and starts. Both debt and spending are monotonically rising (with a small glitch in the monotonic rise of debt during the Clinton/Gingrich years), there’s an exponential rise in spending built into the function used by the Congressional Budget Office to evaluate budgets in terms of cuts (any appropriation that does not increase the budget is counted as a cut; a continuation budget that merely spends as much this year as last is reported by the media as a drastic cut); and the best approximation of US budget spending over any reasonably lengthy period is an exponential. And I don’t feel like saying all that each time I mention the exponential spending built in to any “deficit reduction” plan that does not involve real cuts in spending.
At the moment the best descriptor of both US spending and debt is a monotonic rise. It may flutter here and there but over time it’s an exponential in which each year’s spending is based on 100% plus a percentage of last year’s. Strictly speaking the economic growth of the US is not an exact function of e^x. The more general form cb^x gives a better approximation, but that isn’t exact either. I suppose these gotcha games are fun for some.
I often find Peggy Noonan’s weekly essays worth my time. This one is particularly astute.
The Divider vs. the Thinker
While Obama readies an ugly campaign, Paul Ryan gives a serious account of what ails America.
What ails America is that we spend too much money and we have made the central government not merely powerful, but ubiquitous. We are constructing the kind of Permit Raj that India inherited and took generations to shed after independence. Still hasn’t shed it.
The answer to the Depression is freedom. Freedom will lead to development of energy resources which will lead to cheaper energy, which will grow the economy. Meanwhile we have to stop spending money we do not have in order to accomplish things we cannot afford.
It’s actually pretty simple, but there is an enormous establishment that likes things as they are.
