[p2p-research] Post-Depression first: Americans get more money from government than they give back | csmonitor.com

[J. Andrew Rogers]

On Sun, Nov 22, 2009 at 4:35 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> What is more, we have very sick state budgets...California, Oregon, Rhode
> Island and many others are well past where they can easily maintain given
> current budget realities.


The other current reality is that States like California are not
inherently bankrupt, they are just fantastically wasteful, corrupt,
and incompetent. That kind of deadweight loss is tolerable in a strong
growth economy, but it becomes a dead albatross during less prosperous
times. California is a good example of a state that has been
completely captured by a power structure that uses the government as
its personal money tree.

Tax revenues have very little to do with it. It is not unlike the
people that make millions of dollars per year who nonetheless find
themselves bankrupt because of financial recklessness and profligate
spending.


> The obvious answer is to tax the rich more--even many of the rich realize
> this, but that is political suicide and also unlikely given the nature of
> the US Senate and its veto capacity on all financial legislation.  So it
> won't happen.


The structure of taxes is at least as important as the level of
taxation. The economic loss between two different tax structures with
the same revenue potential can vary by integer factors. This is the
reasons capital gains taxes are generally considered bad but income
taxes are generally considered good -- significant differences in
adverse economic impact per revenue dollar.

European governments generally have smarter tax structures than the US
in terms of mitigating economic growth reduction.


> Innovation will slow and move to
> Europe and Asia much more from which it will diffuse more slowly (think
> Samsung, Nokia or Blackberry versus iPhone).  Less US money will flow to
> nonprofits and free options...and this will again hammer innovation but may
> well accelerate global localism.


Europe already runs a relatively distant third after North America and
Asia, and has been falling further behind every year. While R&D
investment continues to grow in the US year over year, most of the
significant shift has been from Europe to Asia.  Technology and
agriculture are going to remain major competitive exports of the US
for a long time.

There is very little chance that innovation will flow back to Europe,
that continent has been in decline with respect to innovation for many
years with no real hope of reversing that trend.  Asia is where all
the new action seems to be, and as a continent it has almost caught up
with the US in terms of R&D expenditure.


> The only thing that will alter this relatively rapid transition is the quick
> rise of some unforeseen industry where the US has competitive advantage like
> it had in computers, software and financial services.  That's not likely in
> my view.


The US still dominates R&D, but the extent to which this is true is
dependent on the practical ability to convert that R&D into profit.
Private corporations in the US spend more money on R&D alone than the
entire EU from all sources. The US government also spends far more
money on R&D than Europe, but that is driven in part by lobbying of
private R&D enterprises -- the government doesn't just fund it for its
own sake, it is the result of commercial lobbying.


-- 
J. Andrew Rogers
realityminer.blogspot.com