Friday, July 29, 2011

Is the "Debt Crisis" a "Crisis"?

Here is some data I put together based on the debt to GDP ratio for my Intro Sociology class, when I introduce the idea of "social panics" (the Salem Witch trials are a great example--we have a "panic" about every decade).

1) We look pretty much like all of the other OECD countries, whether you're talking about growth, or the debt to GDP ratio. Chart 1 is a plot of growth vs. debt/GDP of the OECD (high income, industrialized) countries. The red dot is the U.S.

2) We've been here before, in the 50s, and our economy was doing just fine. (Chart 2)

3) Has there been some radical change in how much we are paying in taxes? Yes--since WWII there has only been one brief period when our tax revenue was as low as what we are paying today relative to our GDP--by far. (Chart 3)

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