Thursday, November 15, 2012

No Such Thing as a Free Lunch


Jay Carney, Obama's press secretary responded to a (dumb) comment by Mitt Romney with this.

"Making it easier for Americans to go to college — that’s good for America," Carney continued. "It’s good for all Americans. It’s good for the economy. Making healthcare available to young people who can stay on their parents’ plans — that’s good for those families, it’s good for those young people so they aren’t bankrupted in their 20s by an illness. And it’s good for the economy and it’s good for all of us."

It's that kind of logic that leads to $1.4 trillion dollar annual deficits. So great. The young get their goodies now, the bill later. Higher taxes, higher inflation, lower growth, or some combination. What a deal.

Federal Government Outlays and Receipts ($ in Millions)
Source: Monthly Treasury Statement


1 comment:

  1. Re: "trickle-up" economics Dear Eli & Bill, Responding to the Blog's post of Nov. 15, 2012 concerning a proposed increase in government outlays for college education and health care (and, of course, the bottom 48% who want this "stuff"). I have spent my life outside the realm of economics so am not informed re: economic theory and discourse, but I have wondered why there is never a reference to what I'll call "trickle-up economics." After all, it *does* matter that whatever products or services made or offered by those individuals in the upper percentiles of the economy (the "producers") can be paid for and consumed. If American buying power decreases due to an dramatic imbalance in wealth and ability to participate in the market (the bottom portion disproportionally sick, disabled, financially ruined by medical bills, and with hs educations), the economy will fall flat. So, lots of great "stuff" to buy, but buyers situated principally at the top will be disproportionately the (continued from above) Moving on to today's problems -- reportedly, some U.S. car manufacturers have claimed they cannot compete with foreign manufacturers because a significant percentage of the cost of producing a car goes to paying health care expenses for their workers. Logically, if that burden was removed or lessened, auto manufacturers could compete more successfully in global markets. And, if U.S. workers had more access to education, the U.S. economy could expand with direct benefits to U.S. corporations. Are these corporations going to be nothing but free-riders? Is there no expectation that they should have to help pay the cost of the benefits they reap from bearing less of the cost of health care for their workers? And are there any arguments that they should help pay the cost of student loans for workers? Who is to pay for these "gimme's"? Re: education, we are now on the cusp of the broad adoption of online education, which may revolutionize problems of cost.