Inconvenient Realities


by varjavand

When it comes to the US economy, there is no shortage of bad news; awkward economic realities are more numerous than we think. Despite all the talk and heated debates among politicians about the depth and breadth of government economic involvement, the number of Americans who depends on public services keeps rising, a sure sign of dire economic condition. Here are some daunting statistics:

·         The percentage of Americans who do not, or cannot pay, Federal income taxes is up to an estimated of 45% in current year. These people either do not make enough money to pay taxes or end up owing no taxes after deductions and credits

·         An estimated 14.3% of US population, almost 43 millions, live in poverty

·         Government budget deficit for 2010 is projected at $1.3 trillion

·         At least 44% of Americans live in a household in which one member receives social security, subsidized housing, unemployment benefits, etc.

·         The number of people who receive food stamp is currently 41.3 millions

·         Nearly ten million unemployed workers receive unemployment check from US government

·         Currently, 47.5 millions have enrolled in Medicare indicating aging population and continuous growth of dependency on government services

·         All the entitlements programs cost government 2.4 trillion for 2010, 64% of all government expenditures.

Paradoxically, the majority of voters prefer smaller government; however, they don’t want government to cut its spending on entitlement programs. They like to have their cake and eat it too.  That is why government is not good at ending things it started, even when these things are no longer needed or affordable. A case in point is the widespread government subsidy programs implemented by governments in many countries, including Iran, and the protective tariffs to support domestic industries or collect revenues. In addition to promoting inefficiency and distorting the intended effects of such programs, government is unable to terminate them despite the fact they heavily burden the government budget. Even if government does terminate such programs, the unavoidable consequences would be skyrocketing prices of staple food items and other basic necessities and imminent inflation. It is like pulling those who have depended on such systems for so long off their life support system. Massive public dissatisfaction, and even uprisings, would also likely result.

The whole mishmash reminds us of a popular Farsi proverb: One crazy person, or in this case a bunch of greedy idiots, can drop a rock to the bottom of a well, hundred wise men cannot get it out.



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Hi Niloufar,

by varjavand on


Hi Niloufar,


Thanks for your informative comment.

The size of the US government has been getting bigger in recent years due to numerous factors particularly prolonged recession. Government’s share of total national spending in the US which used to be about 15%, meaning that out of every $100 income generated by this economy, nearly $15.5 was spent by government. This share is now, 20.5%.


From economics standpoint, the size of government is measured by the ratio of its spending to total, currently 20.5%. Unquestionably, the main channels through which government can influence the economy is its own budget, tax and spending. However, government can also influence the economy effectively by making, or changing, laws and regulations aimed at business firms and the industries.

For the effect of government spending on the economy in Iran, please review the article below





Niloufar Parsi

nice read varjavand khan

by Niloufar Parsi on

one question that arises: is it practically possible to make government 'smaller'? i am starting to suspect that the growth of 'government' may be 'inevitable'...

but i don't quite equate big government with big spending. this is a slightly different issue. for example, it is possible to reduce spending but increase government involvement in our affairs at the same time, say in the power sector where a government can withdraw from running power plants but increase its involvement in the regulatory side of things.

on the iranian subsidies: it is quite surprising that the biggest fuel and food subsidies are being withdrawn now in the middle of a tumultuous presidency. i wonder what is driving this policy.