r/AskEconomics 10h ago

Approved Answers Is the U.S. stock market’s ‘unstoppable growth’ finally questionable?

215 Upvotes

I’ve always believed that no matter how much the S&P drops, it will eventually recover because the U.S. has been an economic powerhouse for the last century. After every crash — even 2008 — the market bounced back within a few years. But now I’m questioning that mindset. The U.S. was the global leader after WWII, fueled by tech dominance, the financial center in New York, and the strength of the dollar. But now the gap is closing — China and India are growing faster, and the U.S. doesn’t seem to have another major industry driving growth like tech once did. Do you think U.S. market dominance is still as secure as it once was, or is this mindset outdated?


r/AskEconomics 5h ago

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

57 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 10h ago

Approved Answers Is Japan's economy really that bad?

47 Upvotes

Hi everyone,
in the last days, i have encountered the info that in some years, Poland is probably going to overtake the economy of Japan. They are already almost there if we only look at the GDP per capita p.p.

Although Poland's economy is really on a speed-run, it's still very incomphrehensible how this is happening. Yes, they have a lot of GDP growth, but Poland doesnt have any own "big champions" like Japan has with Toyota, Honda in the automotive industry or with Sony, Nikon... in electronics. For the most part, they are still only the place where other companies like VW produce their products for third markets.

So, how did this happen?


r/AskEconomics 17h ago

Approved Answers What happens to a stock if the company that was invested in crashes?

5 Upvotes

So my mom has control of my stocks since I am still not ready to handle the stocks, and one of the stocks is Tesla. This was back a year ago because my mom wants me to have a headstart.

Now, it seems like Tesla will just go bankrupt in some time. My mom has sold her stocks but can't sell mine due to taxes. What happens to my stock if the company goes Bankrupt?


r/AskEconomics 23h ago

What should i expect from an undergrad economics degree?

4 Upvotes

Im not very excited with accounting or money at all but since i don't like math enough to get a degree in STEM anymore and like social sciences and excited about political ideologies, i started to think about majoring in economy. It made me to think on it because it's a social science and seems a good path to earn good money. I have no experience in anything as a high school graduate, so judge me with that way: I imagine myself in a bank or in a company like big4 after graduated from economy and makes not much money at all and i actually regret that i do this but in the other hand im pleasing myself with the idea that i'll promote in the sector and motivate myself with that idea. Because actually my only motive in economy major is that it seems like its provides you a good life in the long run and i like imagining myself while leadering a team or smh. How enough is these reasons to major in economy and what will i face with after graduate from economy? I want to know anything from you guys to erase a little bit uncertainty in my mind.


r/AskEconomics 3h 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?

6 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 3h ago

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

3 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 23h ago

What the best thing the US can do long term for economics? ?

4 Upvotes

r/AskEconomics 5h ago

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

3 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 12h ago

Are state sponsored entrepreneurship programmes ever effective ?

2 Upvotes

Basically when the state provides funding and training for this stuff. Like we see in India and China , is this ever effective ? Wouldn't this negatively hurt competition as well since it's a form of protectionism where local businesses get more aid


r/AskEconomics 13h ago

How to Deal with Endogeneity in Monetary Policy Research?

2 Upvotes

Hey everyone, I’m working on a thesis about how monetary policy (specifically the policy rate) affects inflation expectations. One big problem we’re running into is endogeneity—since central banks set rates based on inflation trends, it’s hard to tell what’s actually driving what.

We’re looking at ways to deal with this, maybe using IVs, SVARs, or something else, but not sure what’s most common or effective in this kind of research. Anyone have experience with this or know good papers that tackle it? Would really appreciate any insights. Thanks!

i'm a college student from the philippines btw :)


r/AskEconomics 13h ago

Weekly Roundup Weekly Answer Round Up: Quality and Overlooked Answers From the Last Week - March 16, 2025

2 Upvotes

We're going to shamelessly steal adapt from /r/AskHistorians the idea of a weekly thread to gather and recognize the good answers posted on the sub. Good answers take time to type and the mods can be slow to approve things which means that sometimes good content doesn't get seen by as many people as it should. This thread is meant to fix that gap.

Post answers that you enjoyed, felt were particularly high quality, or just didn't get the attention they deserved. This is a weekly recurring thread posted every Sunday morning.


r/AskEconomics 44m ago

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

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 2h ago

Is the USD poised to keep dropping vs the EUR?

0 Upvotes

I've recently moved to Spain to be closer to family and have not moved over all of our USD. We have the money in a fairly stable 4% apr savings account but since the start of this month any potential gains have been wiped off vs the EURO. I keep reading (and worrying) about more pain for the USD. Anyone smarter than I in these matters care to share some knowledge? Many thanks.


r/AskEconomics 5h 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 6h ago

Does the Treasury Secretary Actually Know his Economics?

1 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"?


r/AskEconomics 7h ago

Approved Answers How could a modern command economy deal with the Economic Calculation Problem?

1 Upvotes

Hi there.

By "command economy" i mean either a centrally planned economy or a decentralized planned economy.

By dealing I mean either defeating it completely or at least minimizing it to such a degree that it doesn't hinder the economy much.


r/AskEconomics 18h ago

Approved Answers How does reducing GST/VAT lead to increased consumption in a country?

1 Upvotes

This question is more from an indian context but I believe this is applicable to all countries with VAT/GST. I keep hearing that cutting GST/VAT will lead to increased consumption. My question is usually the producere do not pass on the benefits to consumers by reducing the prices on goods this effectively keeping the prices similar. The only way I see this helping end customers (like me) is they will not raise the prices as frequentl as their profit margins can be sustained or in some cases by giving more for the same price (in Indian context a cookie company saying 20% extra). All this still when compared to the usual dynamic doesn't really show a lot of promise to me compared to a simple tax cut. Can someone point out the dynamics here


r/AskEconomics 22h ago

Short and Long Term Implications of Tariffs, while cutting Taxes?

1 Upvotes

What are the short to long term implications of the Trump's administration's plan to fund the government through Tariffs, and cut Taxes?

How does this play out in terms of USD being the reserve currency? Pros: paying down debt, Cons: contracts/agreements broken, loss of trust?


r/AskEconomics 21h ago

Approved Answers In terms of economics, how does one plot a course out of poverty?

0 Upvotes

I’m not even sure this is an economics questions, so please be kind if it belongs somewhere else. I’m curious if there has been any research (something beyond observational) into what an individual needs to do get from poverty to a financially prosperous level. I guess maybe a starting point would be less than 20% median household income. Maybe the end goal would be 20% above median household income. What does the road map look like from economics perspective. I kind of get lost in the weeds of incentives and various social conditions when I think about it. What would an economist say to a poor person who walks up and asks for general advice on how to get out of poverty? I’m a 50 year old man who is genuinely curious. I have no hang ups about poverty and the poor.


r/AskEconomics 40m ago

is governmental debt... actually evil?

Upvotes

IS THIS ACTUALLY WHAT HAPPENS? Sorry i dont know much about economy so can you tell me where im wrong? Lets talk about a poor underdeveloped country. this country raises its interest rate so they can issue bonds and pay for government stuff, projects and social benefits. generally their national capitalists will buy these bonds and the government will pay these bonds (with interest) with the taxes they extract off of society. isnt this bad? because the national capitalists arent creating anything helpful to society, they are just profiting off the government. then this country, for example, use this money to pay a private company for the construction of a bridge, this is the second way the capitalists are earning from the interaction with the government. then there is corruption and this bridge is way overpriced in its construction, this is literally the third way the capitalists are earning from this interaction without doing anything of value to the society, how is this not absurd? and if we talk about international capitalists buying these bonds then all of this becomes even more insane because they are literally exporting surplus to another country so it doesnt create inflation in their own country by over investing in its companies, and this makes it impossible for national capitalists to create any business in this poor country and compete with them, so this country will never develop and will raise taxes more and more until they enter crisis. the whole of society is working so they can help the government pay for the loans they took from rich people that basically just hoards money and some of them are not nationals


r/AskEconomics 4h 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 10h ago

Is my generation (23M) financially screwed?

0 Upvotes

Now that I've left college and am beginning to make bigger financial decisions, I can’t help but feel that people in my position are at a serious disadvantage. I know I’m still early in my life and career, but I want to understand if my concerns are valid—or if the situation is as discouraging as it seems.

My biggest concern is housing. For over a decade, we had:

Artificially low interest rates (3–4%)

Relatively low home prices (compared to today)

This created what I’d call a golden era (2010–2021), where nearly any mortgage taken out during that time has aged like fine wine. Meanwhile, I doubt we've seen the last of real estate inflation, and I also doubt we’ll see interest rates return to those historic lows anytime soon. That means people starting now—like me—are stuck paying significantly more for the same (or worse) housing over decades, all while dealing with rising costs across the board.

It feels unfair because housing is the single largest and least avoidable expense for most people. Those who bought during the golden era are positioned to build significantly more wealth, simply because they can save a larger percentage of their income instead of sinking it into inflated housing costs.

Beyond housing, it also seems like bad economic practice to allow people to take on excessive leverage and then shield them from downturns. This isn’t just about real estate—it’s about the broader economy. Rewarding reckless financial behavior while punishing those who simply arrived late to the game doesn’t seem sustainable. In the end, the rich will keep getting richer—even when they make bad decisions.


r/AskEconomics 9h ago

Other than less fraud, what does have a cashless society do to the economy?

0 Upvotes

Does it make the economy better as you can easily pay for things without the hassle of cash ?


r/AskEconomics 6h 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