shakran

You weren't forced to take a macroeconomics class in school were you? I hated that class, but it did lead to some understanding of the economy that I wouldn't have otherwise.

The output potential is a measure of the maximum sustainable output - i.e. all resources allocated at 100% and at maximum efficiency. Resources in this case means not only raw materials, but also machinery, and (most important for this situation) human resources. The output potential is figured with everyone working at 100%.

Government spending means government is buying stuff. The industries they're buying stuff from have to ramp up production to meet the demand, but the economy isn't very good and they aren't creating jobs to do it. Instead, they're making their people work longer hours, maybe increasing the length of time between inspection/repair on their machinery, etc. In short, they're operating at over 100%. You can do this for awhile, but eventually the people get tired, the machines break, etc, and things come crashing back below 100% (broken machine = output reduced far below 100%. People using sick leave to avoid having to work themselves to the bone = output reduced far below 100%).



That's a very simplistic example, but I didn't feel like writing a novel at 1:30 in the morning


Basically, what Bush is able to do here is artificially boost the economy. He'll probably be able to maintain it past the election, but shortly after that we're gonna hurt.

Look at it this way. WHY is the economy so much better? We're in debt up to our eyeballs, and Iraq is not going to alleviate that situation at all any time soon. We've lost 6 million jobs since Bush took office, and they haven't been replaced yet. The government is cutting its income while increasing its expenditures despite the fact that we're already holding a massive deficit. Corporations are downsizing left and right. If you hold a job for 10 years you're damn lucky. In short, there is absolutely NO REASON for the economy to look this rosy, except that it's being artificially manipulated. This pseudo-boom won't last forever, and when it busts it's gonna hurt. Especially when you factor in the fact that in 4 years the baby boomers start retiring, which will stress the holy hell out of social security, medicare, etc. When the boomers are retired, we're gonna have a huge population of people who are not contributing to the economy but who are using resources from it, and they're likely to do that for 30+ years because our life expectancy is so high. This country is in deep economic trouble and unless we start fixing it right now, today, with none of this cutting taxes bullshit, and none of this "social security will fix itself, let's pretend there's no danger here" bullshit, and none of this "I don't care about the deficit" bullshit, we're going to suffer an economic meltdown that will make the depression look like a picnic.

After all, the depression was mainly a matter of confidence. People no longer had confidence in the economy, so they quit investing, spending, etc, so businesses started getting in financial trouble, so people got more worried, and spent even less, until it had snowballed into a terrible situation.

The coming depression won't be about confidence at all. It will involve real economic shortfalls rather than perceived ones. We can have all the confidence we want, but if the money's not there, the money's not there. In other words, the depression was relatively easy to get out of - create artificial jobs (new deal/WPA) to get money flowing so people would stop worrying so much and start spending. In the coming crash, we won't be able to get off that easy.

BTW, I completely agree with you that the government needs to spend responsibly, but Bush isn't doing that either. It's irresponsible to invest money in a system (Star Wars) that was already proven not to work, and is of limited value anyway. After all, Star Wars was designed to stop Soviet ICBMs from hitting us. They're not bloody likely to be launching any at us any time soon. Iraq is a huge expenditure that was not necessary. We are supposed to defend ourselves, not attack at random. Afghanistan harbored bin Laden, who attacked us, and therefore we had every right to go in and dismantle the organization that was sheltering him. I supported that fully.

Saddam did not attack us, had no way of attacking us (his best missile flew 120 miles. How is that a threat to us, thousands of miles away?). Plus, Iraq diverted military resources from finding bin Laden, who is still at-large. In short, Iraq was a war that we did not NEED to fight for our national security. We gained NOTHING from it (and lost much), so it was an irresponsible decision to invade - whether you look at it from a moral, humanitarian, or economic viewpoint. Bush will have spent billions on fighting Iraq - billions that could have gone into strengthening the economy. He is NOT a fiscally responsible president.


heh. went and wrote a novel anyway. sorry for the length.