Skousen adds, “Gross Output and GDP are complementary aspects of the economy, but GO does a better job of measuring total economic activity and the business cycle, and demonstrates that business spending is more significant than consumer spending,” he says. “By using GO data, we see that consumer spending is actually only about a third of economic activity, not two-thirds that is often reported by the media. As the chart above demonstrates, business spending is in fact almost twice the size of consumer spending in the US economy.”
Yardley and Ewing naturally accept the conventional view that “austerity,” whereby politicians have less to spend, is the cause of European weakness. Of course, what they miss — and in their defense most economists miss it too — is the simple truth that governments tautologically have no resources. The latter isn’t some kind of ideological assertion, or some evidence-free libertarian slogan, it’s just fact.
And with the above fact in mind, we have to ask what drives prosperity. It’s not just success, and if it were, Silicon Valley would be very impoverished. What drives prosperity is constant, market-disciplined experimentation with new ideas.
It’s 2,000 carmakers sprouting up in the early part of the 20th century in the U.S. Just about every one of them failed, but rather than implode based on all the bankruptcies, the economy soared. Fast forward to the end of the 20th century, most Internet companies similarly went belly up, but no sane individual would suggest that the U.S. economy was set back by all the bad ideas that eventually vanished.
When businesses are forming, the economy experiences a surge of information about what works and what doesn’t such that we all benefit. Success doesn’t power prosperity, but information does.
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In short, the only European “austerity” is that which empowers politicians to allocate the always limited resources created in the private economy. The latter is a barrier to the very experimentation that is necessary for an economy to evolve in prosperous fashion.
Astorino’s tax reform would lift the state’s flagging economy.
The executive for Westchester County, north of New York City, is calling for a simpler system that cuts the top state tax rate on personal income to 6% from 8.882%. Eight different tax brackets would be reduced to two, with the 6% rate applying to income above $200,000 for individuals and $300,000 for married couples. A 4% rate would apply to income below those levels.
The Republican would also repeal a utility tax, and by 2020 he’d phase out New York’s dreaded estate tax, which runs up to 16% and has sent tens of thousands of New York residents to retire in better tax climates. Mr. Astorino also wants to cut the state corporate tax rate to 5.9% from 6.5% by 2019. A simplified corporate system would eliminate favors for politically popular industries like the film tax credit that subsidizes the millionaires who produce “Saturday Night Live” and “The Tonight Show.”