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  1. #1
    Senior Member Survive & Stay Free's Avatar
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    Default Does it logically or practically follow...

    That if you cut back the public sector that the private sector would expand? I dont believe so, then where will the jobs come from and what will small and medium business do without any consumers to spend money for them to make a profit?

  2. #2
    Habitual Fi LineStepper JocktheMotie's Avatar
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    The thinking is, that every dollar the government spends and allocates is a dollar that is not spent by consumer that it was taken from.

    If the costs of government are reduced, the private sector has more dollars to play with, and should expand.



  3. #3
    Minister of Propagandhi ajblaise's Avatar
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    Quote Originally Posted by JocktheMotie View Post
    The thinking is, that every dollar the government spends and allocates is a dollar that is not spent by consumer that it was taken from.

    If the costs of government are reduced, the private sector has more dollars to play with, and should expand.
    But the public worker makes an income and spends that money back in the private sector as a consumer. And private companies with government contracts also profit and spend.

    So it's not like a dollar disappears when it goes into the public sector.

  4. #4
    Habitual Fi LineStepper JocktheMotie's Avatar
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    Well sure. It's really just a matter of allocation. You're either taxed higher and get nicer roads and buses or aren't taxed higher and you pay a contractor to do your new kitchen. But the private sector still expands if you're taxed less, simply because the public sector uses less.



  5. #5
    Senior Member Pixelholic's Avatar
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    Quote Originally Posted by JocktheMotie View Post
    Well sure. It's really just a matter of allocation. You're either taxed higher and get nicer roads and buses or aren't taxed higher and you pay a contractor to do your new kitchen. But the private sector still expands if you're taxed less, simply because the public sector uses less.
    Does it though? The Private sector at least in the states seems more concerned with an upward redistribution of wealth. The massive bonus that a CEO is getting isn't going back into the system in any helpful way (I mean, I guess it's good for the yacht industry.)

    I think that's my biggest issue is that the public sector allocates money that helps everyone whereas the private sector is under no such obligation.

  6. #6
    Habitual Fi LineStepper JocktheMotie's Avatar
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    I'm not advocating one direction over the other. There are pros and cons to either method and the extreme of any direction is likely to be bad, so you have to find the sweet spot.

    I'm just saying that's what will happen.



  7. #7
    Senior Member InsatiableCuriosity's Avatar
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    Reinvesting public monies by the Aussie Govt in infrastructure is what saved Australia from the worst of the GFC. We had no real increase in unemployment.

    The Govt created much needed training places for Nurses, Doctors and Teachers (here the big teaching hospitals are run by the Govt instead of private companies and University places for these areas are subsidised by Govt), major projects like new freeways, new railway lines, the move towards greater energy efficiency by introduction of incentives for householders to insulate and install solar power systems and water saving devices, an increase in First Home Owners Grants, all provided a prop for private industry. This in turn allowed them to continue to employ while the GFC happened around us.
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  8. #8
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by Lark View Post
    That if you cut back the public sector that the private sector would expand? I dont believe so, then where will the jobs come from and what will small and medium business do without any consumers to spend money for them to make a profit?
    As a total or a portion? Because I think it's fairly obvious that the percentage of activity that is private would increase.

    As a total, I assume it would, too.

    Unless one can show me a private-public sector, or a sector that is neither. If not, then we're looking at a xor dynamic.
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  9. #9
    Energizer Bunny Resonance's Avatar
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    Rich people have a lower marginal propensity to consume. That is to say, rich people will save more of the money that they make.

    No dollar that is spent disappears unless it goes into a savings account. I spend five dollars on a sammich at Mom & Pop's Restaurant, that kid behind the counter gets a portion of the money and the rest of it goes to keeping the restaurant running. That kid in turn gets money to spend on his own food, the grocery store owner gets money to pay his employees, the farmers get money to keep buying more machines from people who also need to eat. Money just keeps moving.

    If you increase taxes, more money is going to be spent on things that people need. If you lower taxes, more money is going to end up in the bank accounts of CEOs who have way more than enough to get everything they want, much less need. And that money stagnates.

    Oh, sure, the bank can loan out that money to people who aren't making enough to meet their needs... WAIT THAT IS NOT A GOOD THING

    also banks aren't limited to lending out the amount of money they contain anyway
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  10. #10
    Yeah, I can fly. Aleksei's Avatar
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    Quote Originally Posted by Lark View Post
    That if you cut back the public sector that the private sector would expand?
    Well, it depends. On the one hand if you cut back public sector spending that eases the crowding-out effect on credit, lowering interest rates and lowering investment costs. On the other hand, cutting spending in necessary public services such as infrastructure maintenance or utilities could raise operating costs for businesses, lowering investment rates. So the solution here is to cut spending on welfare parasites, and raise spending on infrastructure.
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