Mish Shedlock is reporting on a TrimTabs article that shows government payouts in welfare and employee wages is 66% of USA income. I was alarmed, if so, game over.
It's not quite as bad as it sounds... what govt wages and welfare payments equal is 66% of what private industry pays out. Private industry pays out 5.2 trillion, and govt pays out 3.45 trillion, so yes, govt is 66% of what private pays out, but a more typical way of stating it would be 5.2 + 3.45 = 8.65; 3.45 is about 40%. Welfare and government is about 40% of USA citizen's income. That sounds more like it. Terrible, but not the game over 66%. It is so high in fact "they" are pushing back, and a long process of reneging on agreements is in effect. How far back will the push? As far as they can, first against those who cannot defend themselves, then those who have no one to turn to.
The number jumped about 100% from 2000 to 2010. So what if they found they had to push it back to 2000 levels? That means a 50% cut in income for those who depends on their check from the government, if spread around equally. Now that makes no difference to me, since I get no govt checks. But as you head into retirement or depend on a govt job or welfare, could you stand a 50% cut?
Now they very well may NOT cut the numbers 50%, they may just double the price of bread, which is in effect a 50% cut. One way or another, it will happen, it is happening.
Now the problem with the number being more than zero percent is people on welfare can do better. Welfare is a trap, and best avoided. The problem with a government paycheck is there is no way of gauging what the job is worth, or what value it brings to the economy. With no market signal, there is no serving the customers, there is no self-transformation through self-employment.
Friday, May 20, 2011
Bad, But Not As Bad
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2 comments:
An argument to be overcome in your self employment is the be all and end all which will lead to rocketing welfare and living standards....
You might even devote an entire chapter to it.
The self employment rate in Italy is around 25% yet the country stagnates, with the youth, like those in Spain with a similarly high self employment rate, are dubbed the 'lost generation'. Like Spain, the economy is in dire straits. Yet, surprisingly, it is a country with such an an overwhelming desire to be self employed that it has become a nation of shopkeepers and small business owners who will run businesses on a shoestring and involve several members of the family working less than minimum wage just to avoid working for others.
Not saying that this is a contradiction, but this fact would bug me if I unreservedly accepted that self employment was the cure all.
-Anony Mouse
A casual reader of my blog may surmise I dwell a bit on the role of govt intervention on biz start up and survival. Spain and Italy may have high self-employment rates, but even higher rules and regs than USA.
There may be a sort of condign punishment for those who had govt jobs that inhibited markets find in the collapse an insufficient demand for their skills.
All conditions are temporary. In freedom, there would be ever more division of labor, and ever more opportunity to thrive.
But we have a fundamental issue: our system is grounded in violence, and is thus illegitimate. It is not one that an individual can say "until you show me better, I'll stay here." Its level of ill demands that if you do not care for my suggestion, you have your own better idea. The status quo is going away, what do you suggest?
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