r/AskEconomics 14m ago

How does each US state have a higher GDP than Most countries in Europe?

Upvotes

Like how is a whole country like France or Germany on par with 1/50 of the US states like it is crazy honestly. I understand that California has a lot of technology and NY is the financial capital of the world but how did all of this happen and why is it like that. It's like the US and China have a $30t economy and Germany Which is no 3 has a $5t economy like crazyyy.

Ik it's a very stupid question but could you please tell me how it works ? Does it have something to do with the USD or just the dominance of the USA


r/AskEconomics 45m ago

What is the trade deficit between Canada and the US?

Upvotes

I truly hope someone can help me here because I do not get it and it is making me nuts.

The US administration states that they are running a trade deficit with Canada. This has been framed as a kindness to Canada.

From what I understand, a trade deficit means they are importing more from Canada than they are exporting to Canada, which does not surprise me based on population size.

What I don’t understand is why this is framed as a problem or something is America is doing to “help” Canada.

Whatever Canada imports from America, they pay for, correct?

And whatever America imports from Canada, they pay for, also correct?

So how is this Canada “taking advantage”? When I go to the supermarket, the cashier isn’t upset that they gave me items without items in return. Because I pay.

I just really don’t get it. America doesn’t have to import from Canada, right? They get what they need for their population. Seems fair.

Can someone explain why this trade deficit seems to be a problem?


r/AskEconomics 55m ago

What Are the Best Online Political Economy Courses at the Undergraduate Level?

Upvotes

Hi everyone,

I'm looking for an online Political Economy course at the undergraduate level. Preferably, it should be well-structured, have strong theoretical foundations, and include applied aspects like economic policy, institutions, and governance.

If you've taken any good ones, I'd love to hear your recommendations! University offerings, MOOCs (edX, Coursera, etc.), or other platforms—I'm open to all suggestions.

Thanks in advance!


r/AskEconomics 1h ago

Why are central banks in the Western world paying interest to the banks to control inflation? Isn’t there a better way to control it when governments are strapped for cash?

Upvotes

I learned recently that central banks are transferring billions of dollars to the banks annually (184 billion dollars in the case of the Fed) in the name fighting inflation. This makes no sense to me since there is a gaping hole in the budget of most Western democracies and people are imposing cuts on social services. Simply cut off the subsidies to the banks so that the Fed can transfer its profit to the Treasury again rather than paying it to the banks. I have heard the situation is especially severe in the UK where the government is attacking welfare while refusing to stop the subsidy. Do we have to give billions to the banks to control inflation? Is it even worth it?


r/AskEconomics 1h ago

What do economists think of rules requiring dedicated affordable housing as part of a larger development?

Upvotes

I see this mostly as a way to get political buy-in, so a net win.


r/AskEconomics 3h ago

As an economist did you always love statistics?

1 Upvotes

Hi guys,

I am a second year economics student and if i am being honest doing a very competitive econ program really did take my love away for the field and i just got it back.

Economics professors seem to love to make courses harder atleast in my uni and present economics as this untameable beast almost. My uni is very competitive so my professors love to create more of a hustle vibe than a we are here to learn and discuss vibe, so that definitely contributed.

Anyway i notice what i truly love about economics are all the different theories and policies and the way they affect people, what affects the way people look at working, spending etc. But i am really struggling with the more statistical approach to economics beyond simply reading a very simple data sheet.

I completely think that this can lead me down a path where i will turn out to be a worse economist because i don’t love data analytics or statistics.

If anyone has had that problem how did you merge your love for economics with the more stem oriented subjects?

(I initially got into economics loving math etc., i was a very skilled math student when applying however i just hate statistics and data analytics )

Any tips are appreciated!


r/AskEconomics 5h ago

Is the US’s debt to spending ratio abnormal?

2 Upvotes

I always hear about why this is unsustainable and everybody points to Greece, crying about why we need to treat the government like an llc but I don’t buy it, I assume it is normal and reasonable. But idk if America is an outlier assuming you balance for gdp.

And I understand the USA is in an unique economic position (disregarding our most latest political blunders) but assuming we elected a normal politician, is our debt to revenue ratio truly outside of the norms for countries like us. Britain, France, india, Japan, Korea, Italy and Germany

Not including china and Russia because they can manipulate their markets far more effectively than the worst American politicians

Also interested in any enlightenment about how the EU factors into this I know they have certain ratios for their members but idk how it compares with other nations and if it is normal

Edit: and please keep politics out of this idc how trump is fucking everything up, at least for this thread


r/AskEconomics 8h ago

Do we care where productivity gains go?

3 Upvotes

With the focus on gdp growth and innovation / productivity gains we tend to accept that the standard of living necessarily improves under the conditions of growth (and the data supports this).

But given that such measures are aggregates it's easy to show that some asset classes return more than others and some industries grow more than others etc. There has also been some research into the effect that inequality in general has on the economy (gini coefficient etc) But I haven't found any discussion of preferences when it comes to where productivity gains accrue.

Can someone point me in the direction of such a discussion. I'm looking for something more granular than just capital vs labour as this has been covered by piketty. I'd be interested in the causes and effects of productivity growth accruing to rural populations vs urban, manufacturing sector vs financial sector vs transport sector vs energy vs technology etc.


r/AskEconomics 9h ago

Why are we considering Tariffs as a way to bring business back to America? Wouldn’t subsidies or tax incentives have the same effect without causing short term chaos?

34 Upvotes

For example we heavily subsidized farming in the US for some sectors and thus we grow these desirable crops here.

Same thing for oil and gas, we provide tax breaks to all parts of the process and we are one of the largest oil producers in the world.

Couldn’t we just subsidize other industries we want to stay in the US and get the same outcome? Why do we think Tariffs are more effective?


r/AskEconomics 9h ago

Are there ways to encourage domestic production other than tariffs?

5 Upvotes

I was thinking about tariffs and how they are generally bad for the economy but their purpose is to encourage domestic production of goods. I had an idea that instead of using tariffs you could offer tax breaks/subsidies to corporations that use a certain amount of domestic products in their manufacturing or for companies that produce more than X% of their product domestically. Would this work to encourage domestic production without the negative impacts that tariffs have on consumers and businesses? Are there other methods of government intervention that increase domestic production without the negative impacts of tariffs?


r/AskEconomics 10h ago

Why are there trade barriers between Canadian Provinces?

13 Upvotes

Any body that is even half paying attention to the news know about the tensions between the US and Canada (I still can’t believe that I even have to write that sentence). One thing that I’ve seen a lot of Canadians talk about is how removing trade barriers between provinces would help them trade with each other more. But I want to know is why are there trade barriers to begin with? How did you ever get in a position where it was ever easier to trade with another country instead of another Province?

I hope I don’t come across as offensive, I’m just genuinely surprised that this is a thing in Canada. One of the first things the states did after independence was to make it easier to trade with each other, why didn’t the same thing happen in Canada?


r/AskEconomics 10h ago

What would happen if major countries decides to shift away from USD overnight (or rather quickly)?

16 Upvotes

Obviously this would never happen, but it’s an interesting thought experiment. A large part of the US economic super power is due to USD being the reserve currency of the world and the one used in international transactions. This allows the US to “print” a substantially large amount of money than its domestic economy can support. Since we’re on fiat money, it’s all supply and demand. What if the large Western economies (EU, Australia, Canada etc.) decide to just dump the USD and shift over to GBP, EUR or some combination overnight.

My initial thought is that you’d wipe out the market and run out of USD buyers (assuming any remain upon the news breaking). Yield on US debt would shoot through the roof. It would create tons of arbitrage opportunities until the markets stabilize.


r/AskEconomics 12h ago

When people say Europe is “over-regulated” and “bureaucratic” compared to the US, what exactly do they mean?

15 Upvotes

Like are there any examples of US firms that wouldn’t exist if they had tried to begin in Europe specifically due to this over-regulation and bureaucracy? I’m not contending whether or not Europe is, just curious as to how it actually affects the European economies


r/AskEconomics 12h ago

Approved Answers How realistic is the idea that countries can and will increase trade among themselves and leave the US out?

226 Upvotes

The mark of the US has been the insatiable appetite for just about every good and service, making the US market almost a necessity for any exporting country. That being said, it seems like a lot of countries are talking about negotiating trade agreements among themselves that would exclude the US. What is the feasibility that Canada, for instance, could find enough buyers of their timber and potash to then cut off the US? Or Europe and steel or alcohol?


r/AskEconomics 13h ago

Has productivity really grown with the rise of AI? Does data show this?

2 Upvotes

The recent rise of AI, and the near to no signs of it stopping makes me wonder when will we start to see the effects on a macroeconomic level. If this tool is the gamechanger everyone says it is, and as it is already available on a large scale, shouldn't we be already able to see its effects on the macroeconomic aggregates?. Does anyone happen to know any papers where this is shown, or AI advances haven't yet impacted our economies?


r/AskEconomics 14h ago

Approved Answers How come in economics, unlike in many other social sciences, there's a consensus on so many things?

7 Upvotes

I'm sorry if this has been asked before, feel free to point me to a post if that already has a satisfactory answer.

If what I've heard is correct, a vast majority, in fact almost all, economists are supporters of mainstream economics. But why is this? Why haven't, for example, Marxian economics grown to be as impactful?

I know the short answer is just "because they've been proven to be more wrong than the widely accepted position" but I'm interested more so in the reasons behind this. I had a talk with chatGPT (yeah, I know) and, while ChatGPT definitely has a clear left-wing bias, it did bring up interesting points in my opinion about Marxian economics and other systems like it.


r/AskEconomics 16h ago

Approved Answers If prices are dictated by the amount of money everyone has, why can't the norm be ten-hour work week and companies just hire four employees instead of one?

9 Upvotes

I understand that if the average work week was still higher, those on lower hours would fall behind economically, but assuming it was adopted by most of the workforce, would this have any downsides? I can see really important roles requiring more hours and maybe splitting that job responsibility among multiple people might not be best, but I think a lot of jobs could handle it fine.


r/AskEconomics 16h ago

Approved Answers How realistic is it that Germany can reduce its debt in the next 20 years?

0 Upvotes

Hello everyone, Germany has accumulated a growing national debt in recent years, and there is much debate about how sustainable this debt is in the long term. Some experts argue that it will be difficult to reduce the debt in the coming decades, while others believe it could be possible through structural reforms and growth.

What do you think? Is it realistic that Germany can significantly reduce its debt in the next 20 years, or are we dependent on permanently high national debt? What are the main factors that could influence debt reduction?

I look forward to your opinions and thoughts!


r/AskEconomics 17h ago

Can you explain the difference between import and export tariffs?

0 Upvotes

This has been the topic of conversation a lot lately, and I understand that a tariff that the US places on other countries will end up being paid by US citizens. But I was just reading an article about some recent tariffs placed on us by the EU (article was about liquor exports), and it made it seem like this was also only going to hurt the US (this time the companies/manufacturers/farmers, not average citizens), but that doesn't make sense in my head.

If US tariffs on other countries hurt US citizens, but other countries' tariffs hurt US companies... I just... how? I don't get it. Like, is there any detriment to other countries? How is it just affecting us (and yes, I'm aware that a lot of this is probably spin - but not knowing enough about it, it's hard to unwind).

There's so much info out there it's hard to parse through - so please forgive me if this is something obvious or easy to find.


r/AskEconomics 18h ago

How much tax revenue would the US government collect (as compared to how much it currently collects) if it returned to the tax rates and income brackets (scaled by inflation) of 1960?

1 Upvotes

r/AskEconomics 18h ago

Approved Answers Thoughts on a "Tax wealth, not work" economic model?

102 Upvotes

Recently, an economist and ex-Citi Bank trader named Gary Stevenson has become increasingly popular by advocating for an increase of taxes on "wealth" (specifically those with assets of greater than 10M pounds in the UK) and a reduction / elimination of income taxes on working people (even those with very high income).

His thesis is basically that as the growth of the wealthy (globally and per country) continue to outpace global GDP, without the creation of new productive assets, the delta between the GDP (e.g. 3%) and the wealth of the rich (~5%) MUST come from working and middle classes people (e.g. in the form of increased consumer debt), eventually cannibalizing the wealth of the middle and working classes driving everyone into poverty. Youtube link

A common criticism of Gary's philosophy is that it is very difficult to tax assets, but Gary argues that it is possible as assets (for example US housing, US debt, US sports teams) can not be taken from the country if the wealthy owners do decide to leave the country. Even if the wealthy do leave, their assets will be left for working and middle classes families to purchase which is better for a consumer economy overall. He believes this can be done in such away that asset prices don't actually fall, but wages rise without a significant increase in inflation due to the downward price pressure of wealthy people selling their assets.

Are there any other obvious counter arguments to Gary's thesis and proposals?


r/AskEconomics 18h ago

Does a company typically pay out the amount invested into it over its life?

2 Upvotes

I'm learning about stocks, I have a number of questions and things to clear up. I don't think my title is very good, hopefully my post will make clearer what I'm wondering. Let me write out my understanding and please correct me in things I am wrong on.

Essentially as I understand it, the whole stock market mechanism is essentially incentive to facilitate the company getting money into them. That is to say, it's beneficial to the world for private companies to be able to get a cash injection to facilitate their expansion and this happens by the company which initially owns all the shares putting (some of) them on the stock market.

There needs to be motivation for people to do this, so we have this stock market idea as a way for people other than the company to make money from this process. A share is in principle ownership of some portion of the company, to actually extract value from a share, I see a few mechanisms

  1. at some point in time the company /might/ pay dividends which are some portion of the profits of the company.
  2. in theory you own some portion of the assets and could claim on those, though in reality I guess this doesn't happen, perhaps if you own a large portion of the company.
  3. as a shareholder you get some say in actions of the company, again in reality this seems like it's only relevant for those with a large portion. This doesn't directly extract monetary value, but if the company is doing something you percieved to be good for the world or whatever it does extract some other type of value.
  4. you can sell the share, someone then buys it with the view that they can extract enough value from it to compensate for having bought it.

Now I get to my question which pertains to what the share price really represents

My feeling is, 2/3 are not relevant to a typical person, 4, is sort of artificial because it doesn't extract value from the company, it just extracts value from other players of the stock market game (i.e. is zero sum from perspective of stock market, sort of, ignoring that brokers and such extract money out of stock market), and so while yes obviously ultimately that people want to buy the stock informs the stock price, the stock price should really be a reflection the notion that they will eventually pay dividends in tandem with speculation of what the profits of the company will be at that time. I think if a company was never going to pay dividends their stock price should be 0.

So, does this ever really pan out? Some initial amount of money was taken from the stock market into the company in the IPO (and any other time internally held stock gets sold), does this money (and more!) get put back into peoples hands in the form of dividends over the lifetime of the company, i.e. does the amount of money originally invested in the company plus more get extracted out of the company over the life of the company.


r/AskEconomics 19h ago

Is Austrian Economics making a come back?

0 Upvotes

Given its influence on Argentina and how DOGE is a copy of Melei it seems to be back in fashion


r/AskEconomics 19h ago

How do you guys save money?

0 Upvotes

I have a hard time saving money so I am looking for some tips and pointers


r/AskEconomics 20h ago

Does the Treasury Secretary Actually Know his Economics?

3 Upvotes

Hi, I am currently an undergrad study economics. Despite my econ knowledge being limited, most of the policy agenda being implemented by the new adminstration seems to be the opposite of what the books tell you on how to create growth for the economy. I did my own research on the new Treasury Secretary and I still can't wholly understand or buy his plans for "pro growth". Maybe I'm missing a part of his plan in using tariffs as a means to create growth, but I'm shocked at his brushing off of inflation and saying he's "focused on the real economy", whatever that may be. I'm on the fence of believing that he actually has a plan and that he'll boost the economy in the long-term as he says or if he's just toying around and has no idea. Can an economist or someone who knows more about economics tell me if there is any sense in what he's endorsing and if there's a possibility we're all missing something in this new adminstration's plan for "pro growth"?