Isn’t it only production of goods that stimulates the economy? Do tax cuts stimulate the economy?
They allow us to keep more of our money so that we can spend/produce more. Of course, without reducing government expenditures (fat chance of that), the US government will just go further into debt and hopefully collapse.
Production of goods grows the economy. Usually stimulate is used to mean causing an increase in production.
Government employees consume but do not produce. Cut government jobs and they are forced to find productive jobs.
Though it must be noted that government spending and government taxing are not linked(atleast on the federal level), because the government can fiance itself by debasing the currency.
Is it correct to say that “government employees do not produce”? Since, the governmnet, obviously could decide to buy some machinery and go into the widget production business. And, I would say this is production.
Because of this, I contend, that we should just call any thing the government “produces” a misallocation of resources, since they do not follow the pricing mechanism and divert production away from more ‘productive’ ventures.
— As for the topic, tax cuts allow for people to purchase on the market what they want - instead of the state deciding. This will increase production in the areas where consumer demand has increased.
It’s another pupil taught by Mr. Paraskos!
No, it’s consumption.
So, if I am understanding what you have said, anything made that does not follow in the demand structure of the consumer (i.e. the pricing mechanism) is, in reality, consumption? I can accept this definition, since I obviously see that resources have been diverted from their most efficient ends - but then our disagreement is only in the semantics of the thing.
Am I correct?
Yes because he is saying they do not produce wealth. Just about everything the government produces is worthless.
Only if government expenditures are reduced. Otherwise, you just have higher prices and your purchasing power is still not increased.
Correct. They are simply consuming resources.
Yes, since they’re essentially allocating goods to suit their own desires.