Two Economies With A Common Cold - WSJ.com

REAL CHOICES GOVERNMENT DOESN'T WANT TO TALK ABOUT: Two Economies With A Common Cold - WSJ.com: "- Sent using Google Toolbar"

This article touches on much of what is also in the weekend papers - i.e. something seems out of whack.

For example: why is it that investors would rather be funding consumption-focused government borrowings rather than income generating productive investment?

On one hand, the fact that government takes so much of worker's incomes (for redistribution, etc.) means that someone with EUR 2,000 (or $) of take home pay could actually have perhaps EUR 6,000 - 10,000. The difference could include the need to save for one's own retirement and pay for one's own healthcare.

But, on the other hand, what would that added spending power do to personal consumption?

Add to this urge to consume the idea of cutting the VAT or sales tax. Thus, the EUR 200,000 apartment or EUR 50,000 car might cost EUR 170,000 or EUR 35,000 (Portugal = EUR 25,000). Mightn't this spur consumption?

Of course, the tradeoff would be that those who don't work would be suffering. Also, those with overpaid and unnecessary or questionable government jobs would be out looking for something to do in the private economy.

(An interesting anecdote someone published ran to something like the fact that from 1870 - 1900 the price of goods fell by roughly 20%. Now that was an era of low taxes, huge accumulations of wealth and the explosion of an industrial economy in the US.) Wouldn't it be better today to support new industries, ideas and job creating enterprises than social benefits, job and industry destruction?