PDA

View Full Version : Is anyone paying attention?



LWW
08-12-2011, 03:50 AM
In the UK the British gubmint spends about 42% of GDP ... up from about 35% a decade ago.

In spite of this, they are laying flat on their collectivist back when it come time to provide the most basic government service or all ... defense of law and order.

The EU is having fairly much the same rates of spending as the UK ... and is imploding as we watch.

The Euros are obviously the canary in the coal mine.

UK SPENDING VERSUS GDP (http://www.ukpublicspending.co.uk/downchart_ukgs.php?year=2001_2011&state=UK&view=1&expand=&units=p&fy=2011&chart=F0-total&bar=0&stack=1&size=m&color=c&title=UK%20Public%20Spending%20As%20Percent%20Of%2 0GDP)

EU SPENDING VERSUS GDP (http://www.americanprogress.org/issues/2010/05/greek_myth_profligacy.html)

cushioncrawler
08-12-2011, 05:46 AM
Krappynomix iz everywhere.
The UK and theusofa are going down.
mac.

LWW
08-12-2011, 05:47 AM
Imagine if the Euros had to actually pay for their own defense and keeping their sea lanes safe.

Soflasnapper
08-12-2011, 10:24 AM
These are eye-popping numbers, and I am surprised to see their spending is so large a percentage of their various gdps.

I guess when the expenditures for a national health care plan are included in the government's spending accounting, this is a very large extra amount of money.

But the second linked article concerning Greece vs. the rest of the EU has this data:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">There are many other European countries that spend far more than Greece does but do not find themselves facing a fiscal crisis. Consider the counterexample of Sweden. By some measures, Sweden is Europe’s biggest spender. From 2001 to 2007, total government expenditures in Sweden averaged 55.2 percent of GDP, higher than any other country in the European Union, and in 2009 Sweden spent 56.5 percent of GDP, second highest in the European Union. And yet its budget deficit last year was a mere 0.5 percent of GDP.

Denmark, the only country to spend more than Sweden in 2009, ran a budget deficit of less than 3 percent of GDP. How can this be? Countries such as Sweden, Denmark, Finland, and even France spend far more than Greece does, but they pay for that spending with tax revenues. The problem is that even though Greek spending is studiously average, its tax collections are definitely not.</div></div>

Notice, some of the countries there are spending considerably more as a share of their gdp than is Britain, and are not in the same kind of financial straits. Because, the article reports, they tax proportionally that much more.

What does that mean as to their taxation levels, with regard to their gdps? Plainly, it means that they are taxing at close to these very high numbers of spending to gdp ratio-- close to that same 50%+ ratio to gdp.

Those are astounding levels of taxation, relative to here. We've averaged in the 18% range, historically. When Clinton's terms were closing out, we were taxing higher, at recent historical high rates of over 20% (but were spending at recent historical lows compared to gdp, hence the difference of some hundred billion in surplus). The goal of cut, cap and balance was to reduce the level of spending, permanently by law, to something more like 15%.

Yet we have a couple 50% level plus taxation countries who are (well, were) running very low budget deficits, with that huge taxation evidently not crushing their economies (in terms of creating huge additions to their existing national debt burdens).

It's far from clear who is the canary in the coal mine here.

Countries that spend a whole lot more but tax almost as much more (and have tiny deficits), or us, who spends far less (under half as much as a percentage of gdp), but taxes still far less, and have these runaway deficit levels, and massive unfunded liabilities in the coming decades mainly from unchecked medical costs and the aging population boom.

If anything, it would appear the Swedish and Finnish models are more sustainable than what's going on here.

cushioncrawler
08-12-2011, 03:38 PM
When every country owes other countrys more than its own gdp then every country will be in deep shit.
mac.

Just joking of course. Koodnt happen. But, with krappynomix, praps it kood.

LWW
08-12-2011, 04:56 PM
Sweden? (http://mises.org/daily/955)

Seriously?

Soflasnapper
08-12-2011, 05:41 PM
That's quite old data, from before 2002 (the piece was in 2002, quoting historical data in before that year).

The better measure isn't merely after-tax income, but after-tax DISPOSABLE income (what's left after spending for necessities including mortgage or rent costs, health care premiums, children's college expenditures, cost of child care, etc.). Since those larger costs eat into the after-tax income of Americans heavily, and probably not much at all relatively speaking for the Swedes, you can see where looking only at after-tax income is misleading.

Moreover, the higher after-tax income of Americans is skewed higher by the vast amount of tax expenditures the public has apparently demanded, to reduce their effective taxation rates, but running the federal budget balance sheet into the ground in an unsustainable way. That is, we are heading for a fall in incomes, pre-tax and after-tax.

If the cited figures are correct for Sweden, their system isn't burdening the central government with huge and mounting additional debt. They barely have a deficit worth mentioning.