Attention Elizabeth Warren: This is not China

An economics lesson for Elizabeth Warren.

Just this week, I have been seeing a political ad put out by the Elizabeth Warren for US Senate campaign.  In this ad, she says “We’ve got bridges and roads in need of repair and thousands of people in need of work. Why aren’t we rebuilding America? Our competitors are putting people to work, building a future. China invests 9 percent of its GDP in infrastructure. America? We’re at just 2.4 percent. We can do better.” When I heard this ad, I was again struck by the ineptitude of Ms. Warren.

It seems that she doesn't understand what GDP means.  So, for Elizabeth's sake, here goes.  GDP stands for Gross Domestic Product.  Gross Domestic Product is the total of all goods and services produced in the country. The word "gross" signifies that it is BEFORE deducting expenses.  So, Ms. Warren thinks that we should spend 9 percent of our GDP on roads and bridges? Does she not realize that many businesses operate on less than 9 percent profit? Tax dollars are paid out of profit, not our of GDP.  So, if we would be spending 9% of our GDP, then what is the amount that we would be taxing people out of their profits? Never mind that roads and bridges are not the only thing that tax dollars need to pay for.  We still have to pay for teachers, police, our military, state parks, the whopping Obamacare system and IRS worker's salaries.  

Does Ms. Warren think that businesses can still run if we tax ALL of their profits? That would lead to more unemployment, which we certainly don't need.  Does she not realize that if they don't go out of business, they would need to raise their prices considerably? I guess she isn't concerned about inflation either.

Maybe Ms. Warren doesn't realize that we shouldn't be modeling ourselves after other countries.  China has huge areas that have no roads or bridges.  Then again, there are areas where there are "ghost towns". These are areas with unused public buildings and miles of unused roads.  Here is a link to a newspaper article from the UK Daily Mail that highlights this economic folly

Elizabeth Warren, this is not China. This is Massachusetts, which is located in the United States of America.

I strongly urge all of you to support Scott Brown. He has the common sense not to be trying to model our country after a communist nation.  Please vote for Scott Brown.  Beyond that, please consider helping with the Scott Brown campaign. Put a Scott Brown bumper sticker on your car or a Scott Brown sign on your lawn. Or maybe you can help with phone calls or door knocking. The official Scott Brown campaign website is www.scottbrown.com.

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Sinclair August 03, 2012 at 12:20 AM
Now that's quite a spin right out of the 1950's. Substitute the name Joe McCarthy for Scott Brown, fear.and Communism and all that, and there you have it. China's economy has been booming in case you haven't noticed while our economy tanked during the Republican years in the white house. Your piece was pedantically written, condescending and provincial in a way that implied that people are stupid. Even Scott Brown could do better than that.
Patty Vigeant Locke August 03, 2012 at 02:37 AM
100 million Chinese people are living on less than $1.00 a day. I don't think I would want to be emulating.
bchillin54 August 03, 2012 at 10:22 AM
Don't believe the progressives.
Janet Sroczynski August 03, 2012 at 10:25 AM
Watch the video at: 1) http://www.icis.com/blogs/chemicals-and-the-economy/2011/04/chinas-empty-shopping-malls.html. Entitled: "China Empty Shopping Malls." The article was from Dateline, April 25, 2011. China's Property Bubble. 64 Million Empty Apartment Buildings. Massive Over Supply. Cost: $70,000-$100,000...when the average annual income is just $6,000. And the other article from January 16, 2012 "Cavernous Malls Fail to Lure Chinese Consumers" - from: 1)http://www.FT.com. Financial Times.
juliana zee August 03, 2012 at 03:26 PM
The author clearly misunderstands Ms. Warrens message, or intentionally distorts it to suit her politics. The message is about the priorities of expenditures in successful economies. What happens when infrastructure and education are ignored in order to create greater wealth for very few? This is what we have been watching in our country. The middle-class is growing weaker, education and other town employees are struggling, but we want to continue to enrich the very rich. Its not good for our country. Ms. Warren can see this. She has already advocated for you with the banks, she knows how we have been duped in the past.
bchillin54 August 03, 2012 at 04:19 PM
"One of the great fallacies of our time is that if government doesn't do something, no one will. Its corollary is that if you are opposed to the government doing something, then you are opposed to anyone performing that function at all." - Ron Paul
Patty Vigeant Locke August 03, 2012 at 05:33 PM
@Juliana Zee I have not distorted anything Ms. Warren said. It is a direct quote from her political ad that was televised. Conservatives are not against spending money on road, education, or other town employees. If you read what my own commentary was, you will see that I said we can not spent 9% on infrastructure as we still have to support the other important needs such as education, police, fire, military, national parks, etc. If we spent 9% (which is more than triple what we spend now, it would either take away from that other essential spending, or hugely increase our national debt even further. My other point is that increasing spending by that much would further hurt our economy.
Sinclair August 03, 2012 at 07:42 PM
Republican President Eisenhower realized that this country needed highways. Americans wanted more roads for their postwar cars. Construction would prime the economic pump and help secure the nation's future. He signed the $25-billion Federal-Aid Highway Act to build a 42,000-mile interstate highway system by 1972. Ultimately the cost would escalate to more than $130 billion, and workers would not finish the roads until 1993... Eisenhower wasn't afraid to create a huge public works program, and unlike today's presidents, he wasn't afraid of taxes. The 1956 highway bill levied a tax of 3 cents on each gallon of fuel -- equal to 24 cents today. The revenue went into a dedicated highway trust fund. Under Eisenhower, federal spending peaked at 18.8 percent of GDP in fiscal year 1954 and again in fiscal 1959. When Eisenhower left office in fiscal 1961, federal spending was 18.4 percent of GDP. When President Reagan left office, he left us a deficit. When President Bill Clinton left office, he left a huge surplus which W. Bush inherited. When W. Bush the Lesser departed the presidency after eight long years, he left a massive deficit.
Sinclair August 03, 2012 at 08:02 PM
China's population is aprox 1.3 billion. The most recent poverty stats are about 13% The U.S. poverty level is currently at 15.1%. That's bad news for both countries. We're the wealthiest country and a large part of our mortagae is owed to China. So do you personally think that China's economy is in poor shape when it has actually been doing well.?
Patty Vigeant Locke August 03, 2012 at 08:11 PM
Hmm. Currently, our Massachusetts gas tax is 41.9 cents per gallon and our fedral gas tax is an additional 18 1/2 cents per gallon, bringing the total to over 60 cents per gallon. In response to Sinclair's comments about Eisenhower- Eisenhower saw the need to create highways for defense purposes at a time when we had practically no highways at all. You state that federal spending was about 18% of GDP at the time. My point was that Ms. Warren wanted to increase spending on infrastructure alone from the current 2.4% of GDP to 9% of GDP. If we are currently spending 24.1% of GDP overall and added the additional 6.6% for extra infrastructure spending that Ms. Warren is looking for, it would bring our total spending to 30.7% of GDP. That is just crazy and irresponsible. Here is a quote from Factcheck.org: " Perhaps the most relevant measure of federal spending is how it compares with the nation’s total economic output, as measured by gross domestic product. And spending in fiscal 2009 hit 25.2 percent of GDP — the highest since 1945. It hasn’t come down much since that postwar record. It was 24.1 percent of GDP in both fiscal 2010 and 2011. Spending for each of the last three fiscal years was higher than any since 1946."
Sinclair August 03, 2012 at 09:11 PM
Elizbeth Warren did not state that we should spend 9% GDP according to your original write-up. She said we could do better than 2.4%.
Janet Sroczynski August 09, 2012 at 04:43 PM
The Howie Carr Show of WRKO/AM680- 1) http://audio.wrko.com/a/61132675/welfare-voter-round-up.htm Watch the video.
Dolly August 14, 2012 at 11:56 AM
Let's all remeber that Ms Warren brags about her being the person that started the OCCUPY wallstreet movement......do we need to say more.....


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