I'm here to get an economic education. The above type statement that I took off another thread is something I hear endlessly. Private expenditures stimulate the economy; public expenditures don't. Bush calls for a huge tax cut at the expense of a severe deficit rather than have the government spend it.The former is stimulative and will increase jobs because the money goes directly into private hands but the latter won't because the purchases are made by the government.

If I go out and buy a computer or the government goes out and buys a computer what possible difference could it make to the computer company or the economy in general?

Maybe I skipped over something in Econ. 1A but what exactly am I missing here? Public spending, private spending they are both buying products and services from businesses and are therefore stimulative of those businesses. What's the fundamental difference? Help me out.

You are missing the same thing I am. Deficit spending can stir the economy, regardless if it is increased government spending or reduced taxes. Though,IMO, the Keynesian multiplier effect is close to 1. The benefit to private spending is individuals have freedom of choice and the competition for each consumers dollar is more intensified. I see little difference between a tax cut or increase in government spending when it comes to fighting a recession. In fact, since government can insure 100% of their money is immediately spent while the a certain percentage of tax cuts will be saved, government, theoretically, can stimulate the economy quicker through spending. The Bush tax cuts,IMO, will help us in the long run. The Bush cuts are not structured to apply the maximum of short term stimulus. If they were they would go to the individuals with the highest marginal propensity to consume; the poor.

The fundamental difference is that anything the government buys, it buys with stolen money. When the government buys that computer, it isn't like you buying it with money you earned, it's like a mugger buying it with money he stole from you. I'm not talking morality here btw, that's just how the economics of it works.

Government isn't fundamentally a producer of anything, it's a parasite. It may be a necessary parasite for civilization to survive (and in fact I think that's the case, which is why I'm not an anarchist), but as a general rule what it spends doesn't add anything new to the economy. That's why tax cuts are more stimulative then government spending.

In business terms, government is society's overhead. The less overhead a business has, other things being equal, the more profitable it will be.

Government should have one duty, as far as the economy goes, the money supply.

the truth is we could spend or not spend until we're blue in the face. our economy will continue to fall apart. why, you might ask? because, we don't produce many goods that other countries people want.

ALL economics are based around one simple premise: supply and demand. if someone has a demand for something and you supply it, you benefit, if you don't supply it, and some one else does THEY benefit. everyone has demands, if we supplied those demands, our economy would benefit. but we don't (because many have companies moved their factories to other countries) so our economy is in the crapper.

we used to be a manufacturing economy (pre WW2) during and for a few decades our economy prospered. but we slowly switched into a service economy(we do services of different types for others) and for a while, we were fine. but in (or maybe it's by) the early to mid 90's we became an almost entirely service economy. (we still do have a little manufacturing capability) we now have a service economy, with little manufacturing thus the problems.

The fundamental difference is that the market in general will spend that money more efficiently than a government will. The government spends money on things like defense, construction and social security programs, because that's its job. The private sector spends its money on what it wants to spend it on.

Private sector spending is more stimulative because it follows the laws of supply and demand more closely. The way economies grow is by focusing on the things that it does best. It trades those goods or services for things it is not as good at producing. Private sector spending puts money into the companies or industries that are most efficient at fulfilling the private sector's needs.

Government spending takes care of what is not profitable for those companies or industries to do. Government spending is naturally inefficient, as money tends to flow through layers of bureaucracy, each taking its share of resources. Money spent in places where it would not be spent in a completely free market is inefficient, and therefore not as stimulative.

After re-reading this, I probably explained this in a much more complicated way than it really needs to be.

I've never seen this actually demonstrated in the real world. Yes, governments often waste money, but so do corporations, on a grand scale. Governments face much greater scrutiny.

And there is one thing to consider when evaluating "efficiency." Is the measure of efficiency purely in how dollars and cents, or is it measured against output or end-results? Here in Ontario elderly care has been largely privatized, leading to what is undisputedly (by privatization supporters standards) greater efficiency. The greatest area for savings that competing companies exploit is in nurses. Rather than hire nurses on a for room basis, or employ them full time, nurses are paid based on how much time they spend in a given room. This "opportunity for savings" is exploited by rushing patients through the system so that the nurse spends as little time as possible in a given room. This erodes service. To exacerbate the problem nurses needing to supplement their income are forced to work part time in different hospitals working 18-20 hours a day to maintain their living income.

There is no dispute that care in this area is effectively cheaper in this area, but is it more efficient? Since it is hard to develop a mathematical analysis for something as amorphous as patient care it is hard to say. I would say no, because on any scale the 'production' of elderly care far exceeds the value of any cost in evaluating efficiency.

So I ask again, what really is EFFICIENT?

But little accountability.

You ever seen a government worker fired for incompetence? Probably not, since they are very hard to fire. More likely they are transferred to cause further damage elsewhere.

The local news just did a story about a local city manager who was taking junkets to Florida : allegedly for seminars in better management. The guy never attended the seminars (which the city paid for) and instead partied it up. When confronted, the guy denied it (of course). He can't be fired because he has "seniority".

If this guy was in a private business, he would be gone.

Your example about nurses in Canada is interesting, but I am not sure if I have all the facts straight. Nurses in Ontario make $20.50 to $30.24 per hour ($40k- 59k per year). Not sure how they would need to (or be able to) work 18-20 hours per day to make a decent living.

Nurse Statistics in Canada

Also, only 51% of nurses in Canada work full time. Of course its hard to make a living working part time. I know that may sound flippant, and I realize that I don't know the exact situation going on up there, but I am also not sure that you are giving us an objective analysis.

Usually measuring efficiency includes qualitative and quantitative measurements. In the example you mention, mortality rates would be one measure used to determine the quality of care.

Only a fool would assign any totality to mortality rates in measuring the efficiency of elder care nurses. Their job is to measure, monitor, and maintain a set standard of living; not just keep them alive. If the quality of care has declined siginificantly in the past few years, and with experience I can tell you it has, how can you measure that against a reduction in costs?

Only a fool would not measure mortality rates and look at it as one of the most important measures of patient care.

Perhaps this conversation would proceed more smoothly if you read ALL the words in my posts. I never said that measuring mortality rates is worthless. Obviously in any aspect of the health-care industry people dying is something to be evaluated. I merely said that it would be shortsighted to stop any analysis at that point.

amlord,



Nope, not necessarily, as shown by the many crooks being discovered in business these days.

Let's just say that I have witnessed a lot of corporate funds misuse. Also, here's one heckuvan example of waste: the five million dollar man. A VP of a corporation I won't mention fired a director. The director had documented everything, and his secretary shipped him the box of evidence. The fired director got a good lawyer and settled out of court for five million smackers.

Seems to me, right now, if government spending somehow stimulates the economy, then the economy is pretty darn stimulated. However, it isn't just government spending, it is how that spending is done. If it is done in a way that creates jobs, then I do think the economy benefits. If the money is just shifting hands in a good old boys' network, nothing happens. And if the money is used for war, then you have the problem of blowing up your own products. Plus your rank and file are so poorly paid that nothing happens. Then add the overhead of transportation and support.

I think the most powerful way to boost the economy is for government to work with private enterprise to build out Internet infrastructure, especially high speed short-haul Internet. This would grease the skids for all sorts of e-commerce and business-to-business enterprises to flourish.

Another cool thing that government and private industry can get going is the transformation of our economy from a carbon-based to a hydrogen-based one.

Perhaps I could ask you to do the same with my posts. Do you see on the post that initiated this exchange I mentioned measuring mortality rates as ONE measure that needed to be taken in a qualitative analysis..

I was a manager for a large corporation, in our safety program three key measurements were first aid cases, lost work day cases and fatalities. There was a pyramidal relationship between the three. The object was to keep lost workday cases and first aid cases to a minimum so you would never have to measure a fatality.

I am not familiar with the nursing care industry, the only measure I know has to be measured is mortality rates. I would guess mistakes in administering medicines or illnesses among patients could also be measured. All I am stating is measures of quality of care can be used.

Efficiency is measured by the economic activity each dollar of spending produces.

There are many areas where there are economies of scale, and elder care in Ontario is apparently one of those things. Communities and nations have found that it is more efficient for government to control spending on things like public utilities, social services and infrastructure. Sometimes it is, and sometimes it isn't. However, in general, it is more efficient, or creates more economic activity, for the private sector to control spending.

Activity in the economy is essentially the decisions all entities make in spending their money. They can be individuals, businesses, or government agencies. They determine their own needs and wants, and decide on what prices they will pay for those items. Those entities making buying decisions drive the economy, and business molds itself to fill their demands. When consumers control spending, there is no guesswork on what people need/want and what they should pay for it.