The negative saving rate in US
In the year 2006, the Department of Commerce of the United States of America calculated the national savings rate, and it was found to be negative 1%. The period indicated that Americans have been spending all their cash after-tax and more. In 2005, the department of commerce gave a report that showed a saving rate of negative 0.4%. It means that many workers in different sectors are spending all their cash without saving, yet they are approaching retirement. According to various economists, the inability of customers to sock away some saving pose a significant risk to their future life financially. The negative saving rate also indicates that Americans are spending more cash more than what they are earning.
The negative saving rate is associated with various implications that can affect the entire generation of a country. While consumers may be injecting a reasonable sum of money into the economy, they are exposing themselves to risks like financial disaster, which slows down development for many people in the future. The reduction of the personal and death of internal savings will have to affect the future. In the coming days, an increasing fraction of workers in the United States of America will be over their peak earning days as they near the retirement period. In preparation, aging employees in various departments should pay down their debts. Instead, most workers are not saving anything from the dollars they earn every month. Additionally, the workers are taking are getting access to a large amount of adjustable-rate debt where payments are programmed to increase with the level of interest rates. Therefore, failure to boost saving in the coming years may call for some painful adjustments in the future. The workers will also have a challenge in maintaining the current lifestyle after they go for retirement.
Legal protection of private property is regarded as a way of promoting economic efficiency in a country. Contemporary economists argue that capitalism is one of the efficient and productive systems that can be used in exchange. Private property enhances the growth of the economy because the owner gets access to resources and incentives needed in value maximization. The trading power depends on the value of the support. Based on the system of capitalism, the owner of the resource is subjective to the value of the property. High tax rates have a direct impact on the economy of the country. The most affected actors in this system are the households. Increasing tax rates will reduce disposable income among the consumers because it takes money out. The economy will be affected negatively because disposable income is the primary factor that controls consumer demand.
Judicial corruption in a country is usually associated with high prices for low quality. The action allows for illegal contract awards and other economic operations that encourage an oligopolistic market in a country. Business owners who bribe government officials can manipulate market and policy mechanisms. Manipulation is meant to ensure that individual business owners are the sole providers of goods and services in the market. The government can break down monetary policies to control the economy. For instance, the government can use central banks to manipulate the supply of money in the marketplace. The supply of money in the economy determines the rate of employment and level of consumption. Free trade can promote the growth and development of a country. Free trade gives manufacturers a chance to adopt the right things that will enable them to set correct prices for their goods and services.
Immigration contributes to the economy both negatively and positively in terms of GDP per capita. Immigrants play a significant role in increasing the supply of labor. The action lowers wages and the overall employment output. The overall result will increase income, and capital owners will realize the benefits. Immigrants contribute to the development of new products because they encourage firms to raise their investment.