Wal-Mart Stores Inc. had the worst sales start to a month in seven years…
- A reverse substitution effect
I’m interested to see which it is.
My modest suggestion is that we start calculating the public sector’s “book value” by taking the difference between its actual assets and liabilities. (Since governments have the power to tax their productive citizens, the asset side of the public sector’s balance sheet should be thought of as a share of the country’s total asset holdings.) This approach would probably be more useful than the simple public debt to national income ratio, even if it comes with its own (significant) complications.
He goes on to note:
Under this framework, all government spending could be divided into three basic categories: investment to increase the future standard of living, hedging that reduces the nation’s risk exposure, and resource redistribution.
The post is fairly long and definitely worth reading.