Quote:
Originally Posted by beachmouse
A society works best when there is a balance in rewarding both the labor and capital that contribute to the success of a business. For the past 40 or years or so, we’ve increasingly skewed a lot more to rewarding capital at the expense of labor and IMO we had been hitting an unhealthy tipping point in that favoritism before the pandemic. And skewing too much toward capital at the expense of labor for as long as we have …
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That's a common misperception. It just is not true. From the US Bureau of Economic Analysis (
www.bea.gov):
Quote:
Originally Posted by beachmouse
… leads down to the path to increased social instability because we don’t do social safety nets very well
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We spend far, far too much on social safety nets.
The history of U.S. entitlements is a 230-year record of
continuous expansion and liberalization. The first major entitlement, Revolutionary War disability benefits, was initially restricted to members of the Continental Army and Navy who were injured in battle and survivors of those killed in wartime. Eligibility was then expanded, first to state militia soldiers, then to veterans whose disabilities were unrelated to wartime service, and eventually to virtually all people who served during the war regardless of disability.
Civil War disability pensions followed the same liberalization process, except on a far grander scale. Pensions were initially confined to U.S servicemen who suffered wartime injuries and survivors of those killed in battle. Eventually they were extended to virtually all union Civil War veterans regardless of disability. In the 1890s, nearly one million veterans and their survivors were receiving Civil War pensions. Pension expenditures accounted for 40% of federal spending and continued to rise until finally peaking in 1921. That wasn’t the end of it. Benefits were subsequently extended even to widows of Confederate soldiers.
The last recipient of a Civil War pension from the federal government, Irene Triplett, died May 31 2020 <== Not A Typo -- at a nursing care facility in Wilkesboro, North Carolina. Her father was Moses Triplett; he fought for the Confederate Army, but he deserted in 1863 on the way to Gettysburg. In 1864, he joined the Union Army just so he could get a War Pension; in 1924, at age 83, he married a young 30-something woman (not unheard of at that time; War Pensioners were considered highly desirable husbands because of their pension), ultimately fathering Irene.
Congress followed the same liberalizing process with 20th-century entitlements. The original 1956 Social Security
disability program limited eligibility to permanently and totally disabled workers 50 and older. Ten years later, eligibility had been extended to temporarily and partly disabled workers regardless of age. When the disability program was enacted, it was expected to cost $1.1 billion in 2000, adjusted for inflation. Its actual cost that year was $56 billion. When Medicare hospital insurance was enacted, cost projections were made to 1990. The projected cost for that year was $9 billion, adjusted for inflation. The actual cost was $67 billion.
Medicaid and SNAP, the Supplemental Nutrition Assistance Program (formerly Food Stamps), began as programs to provide benefits to recipients of state-run cash welfare programs. Over several decades, Congress expanded eligibility up the income ladder to the nonpoor who weren’t on welfare. When Medicaid became too financially burdensome for states, Congress enacted the Affordable Care Act to provide federally funded health insurance further up the income ladder. When states didn’t meet the federal government’s liberal SNAP program expectations, Congress nationalized the program. Today, 1 in 4 non-elderly people in the U.S. receive Medicaid benefits, another 10 million receive ACA subsidies, and SNAP provides money to
more than 40 million people.
From the end of World War II to 2019, all—
yes, all—of the increase in noninterest federal spending relative to gross domestic product is attributable to the growth in entitlement spending for the social safety net. The historic Pandemic entitlement spending surge in 2020 and 2021
matches the entire increase that occurred during the preceding 50 years.
Quote:
Originally Posted by beachmouse
I look at where the country seems to be going and I see Brazil in the future. And well I really don’t want to live in Brazil because it’s a cesspool.
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I don't foresee a future where the USA becomes Brazil-like. Regardless, you & I share the common desire that the US does not become another Brazil.
Quote:
Originally Posted by beachmouse
(Yeah, the Nordic countries that generally let businesses do their thing in the free market while maintaining a strong social services safety net seem more and more like they’ve figured out the right societal balance in my book)
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Sweden did flirt with lower-performing socialism for a while. Sweden’s experiment with socialist policies was disastrous, and its economic success in recent decades is a result of market-based reforms.
Until the mid-20th century, Sweden pursued highly competitive market-based policies. By 1970 Sweden achieved the world’s fourth-highest per capita income. Then increasingly radical Social Democratic governments raised taxes, spending and regulation much more than any other Western European country. Economic performance sputtered. By the early 1990s, Sweden’s per capita income ranking had dropped like a stone all the way down to 14th. Economic growth from 1970 to the early 1990s was roughly 1 percentage point lower than in Europe and 2 points lower than in the U.S.
Before its socialist experiment, Sweden had a smaller government sector than the U.S. By the early 1990s, government spending and transfer payments ballooned to 70% of Sweden's GDP, and debt had increased to 80% of GDP. Between 1966 and 1974, Sweden lost some 400,000 private jobs—proportionate to a hypothetical loss of 16.7 million jobs in today’s U.S.
In 1991 a market-oriented government came to power and undertook far-reaching reforms. Policy makers have privatized parts of the health-care system, introduced for-profit schools along with school vouchers, and reduced welfare benefits. Since 1997, government ministries that propose new spending plans have been required to find offsetting cuts in their budgets. As a result, public debt has declined from 80% of GDP in the early 1990s to about 41% today.
To increase incentives to work, Sweden reduced unemployment benefits and introduced an earned-income tax credit in 2007. The electricity and transportation industries were deregulated in the 1990s, and even the Swedish postal system was opened up to competition in 1993. Sweden's corporate tax rate was cut from its 2009 level of 28% to 22% today, and is scheduled to decline to 20.4% in 2021.
Since Sweden stepped away from its socialist experiment and returned to a more market-oriented economy, Swedish economic growth has exceeded that of its European Union peers by about 1 point a year. Sweden is now richer than all of the major EU countries and is within 15% of U.S. per capita GDP. While Sweden still has a larger government than the U.S., its tax code is flatter.
Sweden learned its lesson.
Quote:
Originally Posted by beachmouse
Have done undergraduate and grad level economics.
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I'm curious - where?
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