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In social dictatorships (real name of what you would refer to as communism) people do not work hard enough cause they lacked the prospective of growth. That's where you need capitalism.

So but then the problems arise when capitalism goes on for too long, and wealth becomes concentrated too much to the Elite. The poor will be predetermined to fail to endless poverty by being born to a ghetto neighborhood. So both are the end of the scale. The solution is something in between. That would be capitalism with huge taxes on the wealthy's income and bank accounts.

Money in modern economy is like blood in the body. If it gets stuck somewhere or concentrates too much at a certain place it makes you sick. This is the same as in the US economy where money is too much concentrated with the Elite. Money, or at least most of it is not flowing back to the lower 90% of the society. Elite starts to live in secluded neighborhoods. The rest of the territory becomes ghetto-like, low income families, crime, unsafe. Low quality education etc.

The current economic crisis is based on these facts:

  1. the current economic system was mainly developed by Keynes as "new deal" after WWII.
  2. It basically said that in economic downturn, the government has to step in and do government-purchases, huge investments like (build a dam, reactor roads infrastructure etc.) that will drive the economy, create jobs , create more demand etc.
  3. back then the economy was mostly product-based
  4. since then the economy turned to mostly service-based
  5. Keynes method does not work anymore effectively since government cannot do huge purchases in one. (they cannot order 5Million manicure-s)
  6. government cannot handle the economic downturn, just shovel it under the rug.
  7. we have a huge real-unemployment rate. But the people who do not want to look for a job are not part of the currently viewed unemployment rate. These are the people who get social benefits (foodstamps).
  8. the number of effective employed and working people are many less then it should be, thus the economy's output is not effective.
  9. in this service based ineffective output economy economic stability is based on consumer confidence.
  10. consumer confidence is based on the money available for spending and the future expectation of it.
  11. The only way to increase the available money for spending would be to give more income to the working people. Thus increase spending, demand and consumption, employment etc.
  12. the top 10% of the nation possesses over 90% of bank account money in the US currently. The lower 90% has only 10% of the money.

So what would be the way to provide more money to spend for the consumers in a long term sustainable way given the current circumstances in the US? Can it be done by reallocating the bank account money's to create some sort of equilibrium and drive the economy by giving money to spend for the lower 90%? That would drive spending, consumption more jobs etc. The Elite of course would have to accept that in a way that they give some of their money to the lower classes for spending, but logically they, the elite are the business owners, so they would just drive this way more consumption to their own businesses, so they could make up for it, let's say in 5 years of tax deductions? Or any other solution?

closed as primarily opinion-based by Drunk Cynic, bytebuster, indigochild, SoylentGray, Sam I am Oct 13 '16 at 17:29

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

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    Provide Citation for your 12 facts; your premise is substantially weaker for being based on unfounded suppositions. – Drunk Cynic Oct 11 '16 at 22:56
  • I think your question is better suited on Economics Beta SE. As @DrunkCynic commented, you need to ask your question based on some references. Good luck. – Rathony Oct 12 '16 at 7:35
  • why did i get minus 8 points on this question? – Árpád Szendrei Oct 12 '16 at 18:08
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the current economic system was mainly developed by Keynes as "new deal" after WWII.

The New Deal was Franklin D. Roosevelt's rebranding of his former opponent Hoover's proposals from the election of 1932. It was before World War II, not after. Also, the New Deal was specific to the Great Depression. Most of those programs disappeared afterwards.

The New Deal was a Keynesian stimulus, but it certainly isn't the basis of the post-WWII economy.

Keynes method does not work anymore effectively since government cannot do huge purchases in one. (they cannot order 5Million manicure-s)

Keynes was not trying to increase consumption except in the sense that a more robust economy would consume more. Keynes was trying to increase investment. This is why he suggested that government invest in things like road projects during a recession.

The biggest problem with Keynes' proposals is that governments only half-implement them. Contrary to popular belief, Keynes favored not just balanced budgets but surpluses under normal circumstances. He only favored deficits in the specific case of combating a recession. Governments are happy enough to run bigger deficits when in recessions, but they never seem to run the surpluses to pay them off during the boom times.

Services versus products don't matter, as Keynes didn't advocate buying either directly. In his suggestion, the government would do a combination of direct investment in things like new roads or bridges, tax cuts, and anti-poverty programs to keep people alive (unemployment insurance, food stamps, etc.). In turn, the construction workers, taxpayers, unemployed, and farmers would have money to spend. It's that money that drives consumption. Those people would buy the five million manicures or whatever. Not the government.

  • "Services versus products don't matter," this is not true. " Those people would buy the five million manicures or whatever. Not the government." this is misleading too. Back then, the economy was production based. So 70% of the GDP was mage up of roads building, etc. The government could easily add some investments. Nowadays that just does not work. The economy is now service based, 70%. Products are only 30%. To create consumption, the government back then could easily order a new dam to be built. Now the only way to drive consumption and demand is to order services. – Árpád Szendrei Oct 12 '16 at 18:15
  • but those are made up of millions of small orders. Government cannot substitute them. The only way is to give the people money to spend. They will consume. Why did I get 8 minuses on this question with a masters in economics, when people do not have basic academic knowledge, this is nonsense. – Árpád Szendrei Oct 12 '16 at 18:16
  • "Back then, the economy was production based. So 70% of the GDP was mage up of roads building, etc." Very little of the economy has ever been road building. Road building is almost exclusively government spending. In 1932, 7% of GDP was federal government spending. And only 10% of that was transportation. So roughly $6 billion. In 2016 dollars, that's almost $100 billion. It's about $90 billion now. And overall, government is a larger portion of GDP now than in 1932. Over 40%. – Brythan Oct 13 '16 at 0:52
  • by production based I mean whjat it means in economics. It means in economics that it is not service based. Since the economy can output the GDP in two ways only mainly. Products and services. Back then, the value of the GDP was 70%made up of creating products and only 30% of creating services. Now it is the opposite. – Árpád Szendrei Oct 13 '16 at 17:14
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the current economic system was mainly developed by Keynes as "new deal" after WWII.

Keynes developed a political economic strategy not an economy. However, Keynes has been largely disproved though implementation of his policies. The vast majority of serious economists dismiss him when discussing practical and effective policy decisions.

back then the economy was mostly product-based since then the economy turned to mostly service-based

Not really. The economy is a multifaceted and multi-threaded entity, but product purchases are still the benchmark for the evaluation of the health of the economy.

Keynes method does not work anymore effectively since government cannot do huge purchases in one. (they cannot order 5Million manicure-s) goverment cannot handle the economic downturn, just shovel it under the rug. 7. we have a huge real-unemployment rate. But the people who do not want to look for a job are not part of the currently viewed unemployment rate. These are the people who get social benefits(foodstamps).

This statement shows a grave understanding of reality of the situation. Most of those that have fallen out of the employment figures have taken to doing things outside of the standard employment model. From odd jobs, scrapping, repurposing for resale, and things like driving for Uber, or dog walking. Some of them may qualify for food stamps but even that would benefit a Keynesian model economy. But the actual cost of the benefit is so small in the scheme of the budget that it is not a battle worth fighting, and it has little to no effect on the overall economy.

the top 10% of the nation possesses over 90% of bank account money in the US currently. The lower 90% has only 10% of the money.

This is grossly false.

First the really wealthy do not keep their money in bank accounts. They invest their wealth in more profitable options like Hedge funds, real estate, stocks, Art, etc.

Even when you look at income breakdown the top 10% still only makes about 25-30% of the income for a given year. And that is looking at gross incomes not net, where the number drops to around 15%.

  • i said " economic system" not economy. – Árpád Szendrei Oct 12 '16 at 16:20
  • This is "product purchases are still the benchmark for the evaluation of the health of the economy". a complete nonsense. 70% of the current US economy is consumption based that is mostly depending on services. Not products. And again almost 70% of the GDP's value is comprised of services. Products only make maybe 30%. That is just statistics. I do Not understand why you are voting my question down giving me munis reputation. – Árpád Szendrei Oct 12 '16 at 16:22
  • "This is grossly false. First the really wealthy do not keep their money in bank accounts" – Árpád Szendrei Oct 12 '16 at 16:23
  • I said of the health of an economy. Many experts are predicting imminent collapse of the US Economy. And where do you get your figures that 70% of the economy is consumption of services? – SoylentGray Oct 12 '16 at 16:24
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    Net worth is not the same as savings. yes the wealthy are not in debt... that is a common trait. – SoylentGray Oct 12 '16 at 17:38

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