I think you've misunderstood the nature of government spending. It's not like the government destroys that 27% when it spends it: the money is just redirected from where it might have gone (i.e. consumer spending) to other places (like the maintenance of roads and hospitals). You've forgotten about the circular flow of income.
Besides, GDP per capita as a measure of the productive capacity of a country actually misses quite a lot. Suppose I run a drug company, and I charge $10k / year for a drug that's cheap to manufacture (so there are no worries about the price of intermediate goods or the value that I add). That's 10k per annum that I'm adding to GDP.
But if a competitor offers a generic version of the same drug at ten dollars a year, putting me out of business, that $10k / year diaappears from the GDP figure.
It's easier to think about these things in terms of labor than in terms of money - money is too abstract and it's easy to make logical errors.
Imagine we have a 100% labor/service economy. Each time money changes hands, it means that that much "value" of labor has been exerted. In this sense, it is clear that the GDP is an accurate representation of precisely how much "value" or labor is being exerted in total across the country each year.
If each time money changes hands, the government takes 27%, that means that 27% of all labor exerted in the economy goes to the government, and is spent, permanently. Money is finite in the same sense that labor is finite in this example.
> But if a competitor offers a generic version of the same drug at ten dollars a year, putting me out of business, that $10k / year diaappears from the GDP figure.
No, then the consumer would put that 10k / year towards some other purpose instead, and it would still show up in the GDP.
But the labour goes towards a government program. If the program is absolutely worthless, then you're right: nothing of value was created and 27% of GDP was "spent". But if the service was just as valuable as what each worker would have done, then nothing is lost. The reality is probably somewhere in-between. Some work is wasted as a result of bureaucracy, but otherwise the government makes good use of its taxes.
> No, then the consumer would put that 10k / year towards some other purpose instead, and it would still show up in the GDP.
GDP measures value added to an economy. If the price of a product drops, it adds less value. Consider the cost of adding a column of numbers in the era before computers (done by a trained clerk) vs today, where the cost is effectively zero. We don't account for all clerical work that has been automated away in the GDP figures anymore because it's essentially free.
I agree. I'm not saying government programs are useless. The person you replied to was simply saying that we only have $62,000 a year to spend on each person (and that's all of the resources in the entire economy) and it sounded to me like you were disagreeing and saying we had more than that.
> GDP measures value added to an economy.
I agree.
> If the price of a product drops, it adds less value.
By what definition of value? Are you just defining value as being equal to the price? In a utility-based sense, I think GDP does measure value added to the economy.
> We don't account for all clerical work that has been automated away in the GDP figures anymore because it's essentially free.
In some cases, the GDP might not change if the cost of goods has only gone down, sure, but GDP is a useful figure only relative to the cost of goods. This is how we compare the GDPs of different countries with different currencies.
Even $100k can have zero utility if you need cancer treatment that is more expensive than this.
This is because service costs are usually not negotiable, and especially not privately if you have zero power.
Deriving utility from money directly is an exercise in futility.
In comparison, items can be used for the intended purpose, meaning they have utility for that and related purposes.
Money has unknown utility depending on prices and other various factors.
Without specifying purpose and other constraints you cannot actually talk about utility of any asset.
PPP adjusted GDP is better, because it relates money value to a certain basket of goods which have utility for certain common life purposes. However, the basket typically skips critical pieces like shelter (housing), clothing or indeed weighted averages of medical care. (Medical care is especially tricky because it is very heavy tailed in cost. Low probability events have huge costs, which means in normal average they're hidden. What is needed is the likelihood of a person hitting any of the expensive conditions, which can be had by binning expensive ones together.)
Not to mention if a service is paid by taxes, PPP essentially should count the cost by using the tax value split among all the free services. If it is gated conditionally, then likelihood of that condition has to be counted in. (E.g. free for people making $x or less.)
The great majority of Americans nevertheless do have houses, healthcare, education, sustenance, childcare and jobs. This suggests that the economy can provide these things and that also providing them to the small proportion currently without them is probably feasible.
Making them 'free' and involving taxes just rearranges the payments involved. It doesn't require producing much more than America already does.
The challenge is to do this without damaging incentives and the economy or creating moral hazard (free riders). That's the difficulty.
If the freeriders drain less from the system then it costs to perform measures to counteract them, the system is effective.
Switzerland is by no means a socialist utopia. You don't get a free house, or are somehow guaranteed a high paying job (who was even arguing that?).
But when it comes to healthcare everyone is in the same pot. I.e. you contribute the average for a person your age and share the risk across the population, as it should be imo.
We could absolutely stop people going bankrupt when they get cancer.
This includes subsidies for housing, basic necessities, and healthcare insurance.
My father's entire family, who have literally said that being homeless should be a capital crime because it proves how useless you are.
Yes, bad people do exist. Why is this still a surprise to conservatives?
To get a ballpark for economic factors, let's try to figure out what the total value of absolutely all goods and services transacted, at market value, per year in the US and then divide that by the national population. I think if you asked the average person what they thought this figure would be, most would put it in the hundreds of thousands. Some might even put it in the millions. Fortunately it's really easy to figure out exactly what the answer is. It's precisely what the GDP/capita captures. It's about $62,000. And we're already chopping 27% of that in taxes to fund our current [generally underfunded] programs, so you can drop it down to $45k.
That is, as hard as it is to believe, the entire economic product of the country. Our unimaginable achievements - both social and personal can make it hard to realize how little we actually have. So you need to fund all the grand ideas you have in proportion to this keeping in mind that it doesn't mean you have $45k per person to spend. That is the entire economic product of the country.
This is why it's much easier to have a grand vision than to actually think about implementing it. Taxing the rich is hardly a solution because it again misses out on just how little we really have. If you go and just take 100% of Bezos' wealth from him, all $150 billion, that works out to about $470 per person - for one year. And he is exponentially richer than most rich. By the time you get to stripping the 20th richest person of all his wealth, you're down to $10s of dollars. Not too long after that, you're down to pennies per person. And that is, again, just money for a single year. These grand ideas need neverending annual funding.
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This is why even in places like Norway, which has extensive national wealth due to a mixture of a small population and large sums of nationalized oil money, it's not just free everything for everybody. Solving all of these issues requires much more than just a desire to solve them. The reason I mention this is because I think this shared desire is something that often gets lost in today's increasingly polarized world. We all want the same things; it's just we disagree on how to get there.