A very basic business question.
Discussion
In the 1960s, the USA spent around $25bn on their Apollo space program. At the time, they were huge complaints that the money could have been better spent on other things like health care or reducing child poverty.
Now that $25bn didn't vanish in to thin air, it was used to pay companies, who paid people, who bought things with their wages.....
Now that's just one example, but it seems to me that in such examples, the money just gets moved around, and spent many times over.
So why were there protests? Pretty much all of the money would surely end up back with the government via taxation, and they could spend it all over again.
Comments about what may be my complete misunderstanding of business are very welcome.
Now that $25bn didn't vanish in to thin air, it was used to pay companies, who paid people, who bought things with their wages.....
Now that's just one example, but it seems to me that in such examples, the money just gets moved around, and spent many times over.
So why were there protests? Pretty much all of the money would surely end up back with the government via taxation, and they could spend it all over again.
Comments about what may be my complete misunderstanding of business are very welcome.
It also paid people in universities to develop new technologies, which eventually filter down into everyday life.
As long as money doesn't go straight into the bank, but gets shared around then big public investments in infrastructure, research, space, military equipment of the clever sort, then it filters down into the economy.
The only 'problem' is that when people have money for luxuries, they buy things like TV's and phones and cars and some of them are bought from abroad, so it leaves our economy.
Imagine it like a scene from BREAD. We need to be selling our cars, our research, our weapons, our space knowledge to people outside of our town, to fund more of the same.
As long as money doesn't go straight into the bank, but gets shared around then big public investments in infrastructure, research, space, military equipment of the clever sort, then it filters down into the economy.
The only 'problem' is that when people have money for luxuries, they buy things like TV's and phones and cars and some of them are bought from abroad, so it leaves our economy.
Imagine it like a scene from BREAD. We need to be selling our cars, our research, our weapons, our space knowledge to people outside of our town, to fund more of the same.
The man on the street doesn't understand it that way they see billions going up in smoke with no benefit to them yet it's their tax dollars hence protests.
Same for HS2 it will create jobs before, during and after. It will benefit tens of thousand every year for decades but people protest.
Same for HS2 it will create jobs before, during and after. It will benefit tens of thousand every year for decades but people protest.
The same could be said about defence expenditure - especially on procurement and development of military equiipment. Apollo (and much of the space programme in the 1950s and 60s) was de facto military expenditure, even if a large part of the expenditure was routed via a civilian agency i.e. NASA.
I think the point you're missing is that the money that Government spends solely comes from the private sector. The danger is when the State gets too big and taxes the private sector more and more it stifles growth, people start questioning why they work so hard for so little return. I think like that now ;-)
Pit Pony said:
The only 'problem' is that when people have money for luxuries, they buy things like TV's and phones and cars and some of them are bought from abroad, so it leaves our economy.
Imagine it like a scene from BREAD. We need to be selling our cars, our research, our weapons, our space knowledge to people outside of our town, to fund more of the same.
Imagine it like a scene from BREAD. We need to be selling our cars, our research, our weapons, our space knowledge to people outside of our town, to fund more of the same.
Money spent on imports doesn't really leave our economy though. It's still pounds sterling so it will be spent back here again. If we don't import of course, we can't export.
If you keep 100% of the money in this country then great.
Example - For HS2, if we spend 75% of the money on trains from Germany, and track from steel foundries in France, you have just exported our money and created / amplified long term skills in those countries.
What are we left with, nothing but a big void and a smug grin on politicians faces.
Example - For HS2, if we spend 75% of the money on trains from Germany, and track from steel foundries in France, you have just exported our money and created / amplified long term skills in those countries.
What are we left with, nothing but a big void and a smug grin on politicians faces.
BGARK said:
If you keep 100% of the money in this country then great.
Example - For HS2, if we spend 75% of the money on trains from Germany, and track from steel foundries in France, you have just exported our money and created / amplified long term skills in those countries.
What are we left with, nothing but a big void and a smug grin on politicians faces.
But the money will eventually be spent back here, because it's UK sterling.Example - For HS2, if we spend 75% of the money on trains from Germany, and track from steel foundries in France, you have just exported our money and created / amplified long term skills in those countries.
What are we left with, nothing but a big void and a smug grin on politicians faces.
budfox said:
In the 1960s, the USA spent around $25bn on their Apollo space program. At the time, they were huge complaints that the money could have been better spent on other things like health care or reducing child poverty.
Now that $25bn didn't vanish in to thin air, it was used to pay companies, who paid people, who bought things with their wages.....
Now that's just one example, but it seems to me that in such examples, the money just gets moved around, and spent many times over.
So why were there protests? Pretty much all of the money would surely end up back with the government via taxation, and they could spend it all over again.
Comments about what may be my complete misunderstanding of business are very welcome.
It's not so much a business question as it is a politics/economics question.Now that $25bn didn't vanish in to thin air, it was used to pay companies, who paid people, who bought things with their wages.....
Now that's just one example, but it seems to me that in such examples, the money just gets moved around, and spent many times over.
So why were there protests? Pretty much all of the money would surely end up back with the government via taxation, and they could spend it all over again.
Comments about what may be my complete misunderstanding of business are very welcome.
It is very interesting though, I remember a guy from NASA commenting "we don't just put all the money in a rocket and blast it into space, the money is spent right here on our staff, our suppliers, our universities, our engineers".
As others have said the benefits of things like space flight are the R&D and technologies that result that can make life better for a large number of people.
However whether it's Apollo or HS2 it's a political question. Fundamentally the theory is that governments take money via tax (backed by law and enforced by police) and then decide what to spend it on. They are basically just deciding what my money should be spent on for taxpayers. Reason that's needed is that some things, like police, fire service etc are things that we think we want as a society but need someone to organise collecting a quid or so from each person to then pay a fireman to turn up to work etc. Government just organises that for us. So as a society maybe we thing that developing space-tech is a worthwhile thing to do, so the government arranges to collect a couple of quid of each person to pay to scientists to do that stuff for us. The money just goes back to people doing jobs at the end of the day, the question is what we as a society think is worth doing, and hence what the gov decides we should all spend a bit of our own money on and does it for us.
Two or three massive caveats on this though:
1. The government doesn't always do what society wants, often because society can't agree what they all want so it's literally impossible to keep everyone happy when sections have opposing views.
2. Money spent abroad means that we have a bit less as a country, relative to others. If an oil rich nation sells a lot of it to other countries, they end up with a lot of cash which they can then spend with other countries to buy luxury cars etc. Money spent within your own country just goes round and round, but if you think of each country as a person, the imports/exports give a gauge of how much spending power they have with the other countries (people).
3. When governments 'invent' new money by borrowing (quantitative easing) then it fks things up a bit!
PS "private sector" spending is where we get to choose what our money gets spent on (goes to the wages of the people that do work), and "public sector" spending is exactly the same except someone else decides what it gets spent on (gov decides for us, but it still just goes to peoples wages at the end of the day). PS - you might think that not all money goes on wages, but really material costs are just wages for people further up the supply chain. Oh yeah, and profit, which is not wages, but it goes back to individuals eventually so kind of the same.
BGARK said:
Dr Jekyll said:
But the money will eventually be spent back here, because it's UK sterling.
So if 75% is given to foreign countries (sterling converted into Euro), why would it end up back here?Simpo Two said:
I'm not convinced. If I pay somebody in China £1M to make something for me, £1M or thereabouts moves from UK to China. That's one reason why UK is up to its ears in irretrievable debt and China is up to its ears in cash. Or so my simple brain tells me.
The £1M does move to China, but then it moves back. If it wasn't going to move back the Chinese wouldn't be prepared to sell anything to us. They only accept UK pounds because they have value, they only have value because someone somewhere wants to buy things from the UK.Which is also why we need to import in order to export.
The UK as such is not in irretrievable debt. The so called national debt is simply government debt, caused by the govt spending more than it receives in taxes and largely owed to UK institutions. Nothing to do with imports.
Dr Jekyll said:
The £1M does move to China, but then it moves back. If it wasn't going to move back the Chinese wouldn't be prepared to sell anything to us. They only accept UK pounds because they have value, they only have value because someone somewhere wants to buy things from the UK.
Which is also why we need to import in order to export.
This is true but the problem comes when we import lots to short term consumer cr@p and they use the money to invest in our companies and infrastructure.; keep going that way and eventually our relative wealth will disappear.Which is also why we need to import in order to export.
Come back in 30 years and living standards will have levelled between 1st and 2nd world countries meaning that they will have dropped significantly in the UK and everyone who is complaining now about how hard life is will be remembering the good old days [/we'realldoomed]
Dr Jekyll said:
BGARK said:
Dr Jekyll said:
But the money will eventually be spent back here, because it's UK sterling.
So if 75% is given to foreign countries (sterling converted into Euro), why would it end up back here?BGARK said:
Dr Jekyll said:
BGARK said:
Dr Jekyll said:
But the money will eventually be spent back here, because it's UK sterling.
So if 75% is given to foreign countries (sterling converted into Euro), why would it end up back here?Compared with buying a British product made in Britain by entirely British workers etc, then the difference is you are reducing the value of the pound compared with the Euro. So bad for anyone else wishing to import, but good for anyone wishing to export.
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