In a very weak economy, when you say 'cut government spending,' what you mean is you're laying off school teachers and you're de-funding various programs that put money into the economy. This means you have more unemployed people that then draw unemployment benefits and don't pay taxes.
Interpretation
Cutting government spending in a weak economy leads to higher unemployment and less overall economic support.
Fareed Zakaria highlights the paradox of cutting government spending during economic downturns. While such cuts are often seen as an attempt to balance budgets, they can result in greater unemployment and a contraction of economic activity, as essential services are removed and those affected by layoffs become reliant on unemployment benefits, thus exacerbating the very financial challenges the cuts intended to address.
In practice
This quote can be used in discussions about fiscal policy at a public forum.
But now, we are becoming suspicious of the very things we have long celebrated - free markets, trade, immigration, and technological change. And all this is happening when the tide is going our way. Just as the world is opening up, America is closing down.
It is likely that human beings will find fulfillment and will be rewarded for the same qualities that they have been rewarded for for 5,000 years. And that is intelligence, hard work, honesty, a sense of character, loyalty to family and friends, and above all, love and faith. If you are trying to decide what you should do, those are the things you should do. And you know it.
The Berlin Wall wasn't the only barrier to fall after the collapse of the Soviet Union and the end of the Cold War. Traditional barriers to the flow of money, trade, people and ideas also fell.
If you listen to the political discourse in America today, you would think that all our problems have been caused by the Mexicans of the Chinese or the Muslims. The reality is that we have caused our own problems. Whatever has happened has been caused by isolating ourselves or blaming others.
In the 1990s, we were certain that Saddam Hussein had a nuclear arsenal. In fact, his factories could barely make soap.
But as the arms-control scholar Thomas Schelling once noted, two things are very expensive in international life: promises when they succeed and threats when they fail.
We plutocrats need to get this trickle-down economics thing behind us: this idea that the better we do, the better everyone else will do. It's not true. How could it be? I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff, do I?
Raising the minimum wage allows business people to stop thinking about workers simply as costs to be cut and allows you to start thinking about workers as customers to be cultivated.
In reality there is no such thing as an inflation of prices, relatively to gold. There is such a thing as a depreciated paper currency.
One way to measure the size of a company, industry, or economy is to determine its output. But a better way is to determine its added value - namely, the difference between the value of its outputs, that is, the goods and services it produces, and the costs of its inputs, such as the raw materials and energy it consumes.
THE CORRECTION, when it finally came, was not an overnight bursting of a bubble but a much more gentle letdown, a year-long leakage of value from key financial markets, a contraction too gradual to generate headlines and too predictable to seriously hurt anybody but fools and the working poor.
The forgotten man at the bottom of the economic pyramid.
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