Could America go the way of Greece?
Thoughts?
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Could America go the way of Greece?
Thoughts?
I'm more worried about America going the way of Rome. Coincidentally, so was Thomas Jefferson. Increasing taxes won't bring in more revenue unless people actually pay those taxes. An oppressive tax system will send the productive citizens running to barbarian territories even though the punishment is death.
Revise the tax code, make it simple and fair. Forbes' plan for the flat tax post card is a good start. Sit back and watch the revenue roll in (With no loopholes for the rich, or rebates for the poor). Couple that with reduced spending and reigning in the presidential ability to wage war without the consent of congress and we just might be able to save this country.
I'm terribly sorry but that article is a pile of horsedung. Greece and the United States are nothing alike.
1) Greece does not have its own currency - unlike the United States that can support fiscal changes with monetary change, Greece cannot do that because it cannot change the interest rate of the Euro. And this causes two problems: First of all (and the bigger one in my opinion because its effect is for years to come) the natural interest rate is different in every country (determined by growth rate and total factor productivity) and obviously Germany's productivity isn't the same as Greece, and the second one being the interest rate of the Euro does not reflect the risk premium of Greece, therefore Greece has a too-low interest rate which makes its liquidity problem even worse (interest too low=people don't want to lend them money).
All of the above is not a problem in the US because the Federal Reserve has the ability to determine the interest rate as it sees fit.
2) In order to close the deficit there are three organs that need to play together: the government, the manufacturers and the workers. In this area, the USA also has a huge advantage over Greece because workers organizations there are stronger, making it impossible to lower the real/nominal wages and therefore making it impossible to lower costs. When you can't do that, it's very hard to cut on expenses and close the deficit.
Therefore, the comparison between USA and Greece is irrelevant.
As for Rome and the issue of taxes, that's something for another day but I'd like to say that Europe has high tax rates and productivity is just a little lower than the USA's. Studies on that matter show that if the government is not corrupt, the loss of productivity from the implementation of taxes is almost non-existant. Other studies show that the difference in tax rates has a psychological motive (in the United States people believe hard work can make them rich and in Europe people believe that luck makes them rich - i.e. being born rich) and so it's unclear what is the cause and what is the effect - it likely goes both ways (a self fulfilling prophecy).
I think the USA's financial state is not a good one, but it's far from being a catastrophe. If it can lower its external debt then I don't think there will be any problem in future to come, but right now, when it's still unclear if the 2008 depression is over, the government would be wrong to cut on expenses as it would be a pro-cyculatory behaviour and the effects will be even worse than a deficit.
Exactly what Jidoe said.
Our Chancellor of the Exchequer has been using the Greek Defense for over a year now, despite the UK and Greece being, in fiscal terms, absolutely nothing alike.
This is interesting, as the US and the UK have the lowest rates of social mobility in the West, with smaller, higher tax nations like Denmark and Norway having the highest rates and highest quality of living.Quote:
(in the United States people believe hard work can make them rich and in Europe people believe that luck makes them rich - i.e. being born rich) and so it's unclear what is the cause and what is the effect - it likely goes both ways (a self fulfilling prophecy).
Did you even bother to read the article? I'm guessing not because that is what it argues too.Quote:
I'm terribly sorry but that article is a pile of horsedung. Greece and the United States are nothing alike.
I have read it. This article is not a good article. The conclusion is rather obvious but the reasoning the author chose are not the strong reasons in my opinion. I have written above my opinions as to why I think the US faces a different problem.Quote:
Originally posted by Xywalan
Did you even bother to read the article? I'm guessing not because that is what it argues too.
What is social mobility?Quote:
Originally posted by khaltek
This is interesting, as the US and the UK have the lowest rates of social mobility in the West, with smaller, higher tax nations like Denmark and Norway having the highest rates and highest quality of living.
Income mobility in the US is amongst the highest in the world - if not THE highest.
Social mobility is the upwards or downwards transition of social status, resulting in a change in their position in the status system (working class to middle class, etc).
Not necessarily analogous with increased or decreased wealth, depending on the nation in question.
http://en.wikipedia.org/wiki/Social_mobility
As for economic mobility, some studies suggest the countries I mentioned have far higher income mobility than the US, some studies suggest roughly equal levels.Quote:
In 2005, The Economist wrote that
evidence from social scientists suggests that American society is much "stickier" than most Americans assume. Some researchers claim that social mobility is actually declining.[4]
A CAP study of 2006 found that:
By international standards, the United States has an unusually low level of intergenerational mobility… Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.[5]
http://en.wikipedia.org/wiki/Income_mobility
The Brookings Institution report in particular found the US and UK to be poorly performing on Economic Mobility, summed up here:Quote:
Using the ratio of an individual’s current income to that of their parent’s, there is no academic consensus whether the United States has less or more relative mobility than other industrialized nations[1][5][6]. According to one study, the income of a person's parents is a great deal more predictive of their own income in the United States than other countries[4]. France, Germany, Sweden, Canada, Finland, Norway, and Denmark all have more relative mobility than the US, while only the United Kingdom is shown to have less mobility[1]. According to this study done by Miles Corak, The United States ratio of relative mobility is 1, whereas the other countries mentioned with more mobility have a range of 1.25 (France) to over 3 (Denmark)[1]. However, at least one other recent study has concluded that relative mobility is about the same in the US [5][note 1]. Economic mobility in developing nations (such as those in Africa) is thought to be limited by both historical and global economic factors[7]
http://www.economicmobility.org/asse...ational_F2.pdf
It's a shame that the US rates poorly in this area. I personally blame the interference of government. The idea that all men are created equal, and that a divine creator has endowed mankind with the right to persue this kind of social progression free of government interference is EXACTLY what this country was founded on. Wouldn't Woodrow Wilson be happy to know that the Great Society is working.Quote:
Social mobility is the upwards or downwards transition of social status, resulting in a change in their position in the status system (working class to middle class, etc).
I think you are misunderstanding the situation - the countries which have more government interference are the countries with the higher social mobility, according to Khaltek's links.Quote:
Originally posted by Tartun
It's a shame that the US rates poorly in this area. I personally blame the interference of government. The idea that all men are created equal, and that a divine creator has endowed mankind with the right to persue this kind of social progression free of government interference is EXACTLY what this country was founded on. Wouldn't Woodrow Wilson be happy to know that the Great Society is working.
From my knowledge, social mobility goes exactly the other way - higher in Commonwealth and lower in Europe, but I'll have to check a few studies to see about that.