That's a misconception. People who produce are adding value into the economy as well as using what others produce. Growth is beneficial to an economy, and so long as people are adding to the overall production, the economy will be able to continue to support itself. The problem enters when too many people become dependant upon the welfare system and other parts of the economy which do not add value back into the economy. That causes economic recession. The old economic model still holds value. If the government receives nothing in the form of taxes, fees and other income, the government would be unable to provide the services needed. If the government charges everyone 100% of what they make in the form of taxes, everyone will stop work because they get nothing for it anyway, so why bother... resulting in the same thing, the government gets nothing. Somewhere along the line is a point where the government can collect enough tax to maintain services and at the same time I take enough home so that I can provide for the needs of my family and have a little left over for the niceties of life. Even if the Federal Government and all governments around the world were to fail, we would still have a local economy. A village would have someone who can build something, someone who raises crops, someone who repairs broken equipment, someone who makes shoes. These people would trade so that the shoemaker wouldn't need to spend his time building his shop and the mechanic wouldn't need to stop repairing things to grow his crops. An economy grows when people are able to do more by specializing to the degree that they can do one job better than most others.