Tag Archives: unemployment

social security and basic reasoning

It appears both republicans and democrats would like to kill social security for those people willing to pay into the system. There is a continual move towards privatization of retirement accounts, while offering minimal retirement plans to people that are near welfare status.

There is a systemic reason why both republicans and democrats are attempting to kill social security for the middle class and above. When older able bodied people choose to retire, the labor supply diminishes. With a diminishing labor supply, the cost of labor goes up.

I doubt it is coincidental that in an era which the age requirement for social security has risen, the labor supply has been relatively abundant as opposed to the era before the age requirement was raised.

 WOW! It’s WebStory!
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What caused Greece and Spain to be in their current scenario?

Loose lending standards of course.

Mish over at his blog continues to believe  that… “Big government and absurdly strong unions destroyed Greece and Spain.”  He then compares the mess to California.

 

Mish’s view on the cause is distorted.  Governments do not collect taxes based on services rendered, but they collect taxes based on a percentage of revenue.  As a result, they spend based on a percent of revenue.

If you follow the logic, loose lending standards help increase revenue… Once the lending standards were tightened, we saw a loss in revenue, which resulted in a serious belt tightening.  In essence, under our current financial system, lenders control the government spending.

While I do not hold big government spending totally unaccountable for the scenario they are in, it would naive to say they are to root of the evil that has created the scenario we see today.