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Politics : Foreign Affairs Discussion Group
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To: neolib who wrote (215870)2/1/2007 4:31:29 PM
From: Sun Tzu  Read Replies (2) of 281500
 
>> I have never claimed that there is anything like an ideal free market. But the US economy is not a bad approximation

You think?! I guess the last creature to acknowledge water is the fish (more on this in my next post). I did a quick search and this is what I found for 2005:

Federal Spending = $T2.6
State & Local Spending = $T1.7
Total Government Spending = $T4.3

Now choose a multiplier for the GDP [see en.wikipedia.org ] This is often belived to be between 5 and 10, but let's be generous and choose 2.5 (i.e half of typical minimum)

Then the effect of government spending on GDP is 2.5*4.3 = $T10.75

Now let's compare that with the US GDP which was $T12.49. In other words, government spending indirectly accounts for at least 85% of the GDP!! That hardly looks like "free market" to me.

Now since this was a just back of the envelope calculation, I know that I have missed something there, so everyone is welcome to do a detailed analysis. Off the top of my head, I can say I did not account for the transfer of payments from the federal government to state and local governments. So some portion was double counted. But then again, I was generous with the multiplier number.

ST
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