mustang19:The study refers to public infrastructure.
It makes no reference to why private infrastructure is allegedly unlikely, let alone impossible, yet you pointed to it to support that notion. Where I come from, that's called intellectual dishonesty.
mustang19:I've discussed my reasoning for the rest.
Not to my satisfaction. If you want to actually convince me, you'll have to discuss it more.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
I think this first paper by Alm and Rogers doesn't define "conservative" very well.
It says: "Mofidi and Stone (1990) find that state economic performance depends upon the interrelationship between state taxes and the programs upon which the taxes are spent. They also find that state and local taxes have a negative effect on growth when the revenues are devoted to transfer payments, but that expenditures on health, education, and public infrastructure have positive effects on growth."
It says: "there is strong evidence that a state’s political orientation, as indicated by whether the governor is Republican or Democrat, whether the state has enacted tax and expenditure limitation legislation, and whether the state frequently elects a governor of the same party as the incumbent, have consistent, measurable, and significant effects on economic growth. Perhaps surprisingly, having a Republican governor is associated with lower rates of growth."
There is the implication that conservatives (read republican governors?) do not favor state government investment in health, education and infrastructure. But has that really been the case?
I cannot find any information from the paper that shows this to be the case. I am also not certain of what, if any, conclusions I am to draw about policy at a federal level.
Also which programs are considered to be "transfer payments?"
The paper concludes: "our estimation results indicate that a state’s fiscal policies have a measurable relationship with per capita income growth, although not always in the expected direction and seldom in a way that is robust to alternative specifications. Tax impacts on state economic growth are quite variable; expenditure impacts are more consistent across different specifications. The statistically significant correlation between state (and state plus local) total 28 tax revenues and economic growth is very sensitive to the regressor set and the time period examined. Often, there are highly significant correlations measured between these variables and per capita income growth, but further work needs to be done before it can be determined what these results mean."
So I'm not really sure what to make of this paper.
As already noted, I think there are numerous problems with these studies. However, let's say they come to the correct conclusion; that, under left-wing leadership, economies have tended to grow faster. What's your point? What are we to draw from this?
I'm concerned you're trying to draw conclusions about economic theory from something that has very little (if anything at all) to do with economic theory.
Just what you've said. Make of economic growth what you will.
On infrastructure: the fact that [http://www.fhwa.dot.gov/policy/nadiri2.htmf]public[/url] capital increases private productivity does indicate suboptimal private productivity investment. I don't intend to be taken literalistically. It's not a matter of "no private capital has ever existed at all", but whether or not its level is optimal.
"Optimal" according to whom?
You could use different measures. One could be in the sense that it creates more consumption than it displaces. When public capital creates enough revenue to pay for itself three times over, the point is pretty moot anyway.
In other words, there's no objective standard for "optimal", so appealing to the notion of there being one (as you did) is baseless.
I've been lurking for a while and finally decided to sign up to the forum. Since I'm terrible at introductions i'll just jump right in.
In response to the original post, from a psychological stand point the fact that liberal parties have better economic growth isn't that controversial, conservatives are usually against change. One would think that wanting things to stay the same isn't the best idea when it comes to economic growth. Just because liberal parties are better for economic growth doesn't necessarily mean that they are good, or the best, for economic growth however.
As for infrastructure. Regardless of the high cost, the infrastructure would still be built if it were absolutely necessary. Take a bridge for instance. It may cost a large amount of money to build the bridge, so much that a single business may not be able to afford to have it built. Public infrastructure such as a bridge usually benefits more than just a single business though, so it would be in the interest of several businesses to have the bridge built, they can just pool their money together to have it built, if the bridge is actually worth being built that is. I don't see why people have such a problem understanding something so simple.
I don't think "defenders of the status quo" quite encapsulates all of conservative thought. Nor is it necessarily unique to conservatism.
Since it seems we're talking about what is commonly called "fiscal conservatism" I assume we're mainly describing attitudes towards taxation and government expenditure.
Correct?
I'm just trying to be clear on the language.
True, but there are commonsense ones.
Yes, that's it. Apparently there's something about public investment that makes economies grow.
@ bloomj31
It's true that not all conservatives are "defenders of the status quo", generally speaking though, conservatives are usually less open to change.
The quotes in the original post fails to properly define conservative and liberal so we can't fully know what they mean. Assuming for a moment they mean fiscal conservative vs. fiscally liberal, I would say they're findings are meaningless, high production doesn't make a economy better off; efficient production does.
"Oh look Bob built 500,000 pen warmers. Dave only built 5,000 cars. Bob must be better off economically, right?!?!"
mustang19:Apparently there's something about public investment that makes economies grow.
Well, certain types of public investment in particular if I'm to believe this paper.
Republicans can spend just as much money as Democrats though.
mustang19:True, but there are commonsense ones.
"Common sense" has no place in logical debates about economic policy. If you're actually trying to masquerade certain political rhetoric as such, that's a different story.
I wish you a long and happy life. Been a nice chat.
Good riddance.
For the record, appealing to common sense is a logical fallacy.
mustang19:I wish you a long and happy life. Been a nice chat.
And just where do you think you're going? What are you afraid of, exactly?
You could say that, but it really doesn't click to say public infrastructure is bad when it increases economic growth and everyone's disposable income.
mustang19: You could say that, but it really doesn't click to say public infrastructure is bad when it increases economic growth and everyone's disposable income.
I will now direct you to post hoc ergo propter hoc.
"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann
"When A Man Dies A World Goes Out of Existence" - GLS Shackle
If production for the sake of production was all that truly mattered, and if simply producing the largest sum of goods and services possible truly made a society wealthy, and constituted a vibrant and functional economy, then the GDP measure would indeed serve as a fairly useful tool. Unfortunately, true wealth is contingent upon economic coordination along with production. You cannot simply produce; you must produce what is actually demanded by the masses in the most efficient way imaginable. After all, the Soviet Union's GDP figure was rather enormous and yet the people were very poor (they were able to produce a lot of steel but only at the expense of food, textiles, etc).
In other words, the GDP measure doesn't distinguish between actual, warranted investment and malinvestment. In short, it entirely ignores economic coordination altogether.
[EDIT] Also, and this has been mentioned already, you can arbitrarily and temporarily increase the GDP figure by pursuing some very destructive policies.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
After all, the Soviet Union's GDP figure was rather enormous and yet the people were very poor (they were able to produce a lot of steel but only at the expense of food, textiles, etc).
Not really. Soviet GDP per capita was terrible.
A lot of these studies on public infrastructure focus on reducing costs to manufacturers and how infrastructure simply allows them to make the same thing more cheaply. If that's bad in some way, please go into detail.
Is what bad? Stealing from the many so that the few may prosper?
Actually, it's more like people voting for public goods that benefit everyone. But ya'll win, I give up.
I see you don't like it when someone poses a question that offends your sensibilities. Perhaps we don't like it when you pose false dilemmas and commit logical fallacies. There's this thing called intellectual honesty that you should probably go find.
Not sure where you got this from. USSR GDP was 1.5 trillion in 1990 (was 900 billion in 1986).
GDP and GDP per capita are not the same thing. Soviet GDP per capita was about half the US'.
And this was the case because...
GDP and GDP per capita are not the same thing. Soviet GDP per capita was about half the US'
First of all, we're talking about GDP and how useful it is as a measure of economic performance. My initial claim was that the Soviet Union had a very high GDP figure (in relative terms), and it did (I believe it had the 3rd highest GDP at the time). I don't know why you're suddenly talking about GDP per capita. Either way, its GDP per capita was much higher than global averages (and their GDP growth figure was enormous).
Also, you should think about the core issue I raised in my initial response to you regarding economic coordination.
You know why. I expect an argument as to how public streelights are communist.
Either way, its GDP per capita was much higher than global averages (and their GDP growth figure was enormous).
Compared to Africa, Asia, and the rest of the third world at the time, maybe.
Provisioning public infrastructure does run into coordination problems, but empirically it still increases economic growth.
mustang19: Provisioning public infrastructure does run into coordination problems, but empirically it still increases economic growth.
There's that post hoc ergo propter hoc fallacy again.
@mustang19
Here, I'll make it easier for you to see why your statement is the post hoc fallacy. You are making the claim that when the government spends money on public infrastructure, it necessarily increases economic growth. You have to show that there is a necessary causative link. Well, to be honest, you can't, because there isn't one. Here are some examples:
Okay. Look, there is no necessary causative link between your two statements. Just because there is public infrastructure built does not mean that there will be an increase in economic growth. In many cases, there is actually a decrease. This is where the free market really shines. People invest in things that will make them money. When the government does it, the government can do it at a loss, so we have no way of knowing beforehand if it will actually be beneficial to the economy (though it may benefit a certain precious few). And that loss is borne by the taxpayers instead of investors. Everyone suffers when it goes wrong, and because it is subsidized, people don't feel it as badly right away, though they will feel it eventually.
You are making the claim that when the government spends money on public infrastructure, it necessarily increases economic growth.You have to show that there is a necessary causative link. Well, to be honest, you can't, because there isn't one.
I've linked to pages and pages of evidence on this.
As measured by GDP, which is very much an iffy statistic that only gets iffier as government attempts to manipulate it increase.
Going by GDP, a nation in recession could simply spend billions of dollars building a ten square kilometre gold statue of the resident head of state in the middle of nowhere and discover that this activity has, in fact created incredible growth! Except all that's really happened is that resources that would have gone to something useful have instead gone to making a giant statue, meaning the net long term effect is about the same as had you just tossed the equivalent in consumer goods into a volcano.
If that happened in real life, that is.
mustang19: I've linked to pages and pages of evidence on this.
Look. There is no necessary link between increasing government spending on public infrastructure and an increase in economic growth. Do you understand what "necessary" means? It means that it must be the case that if the government increases spending on public infrastructure that there will be increased economic growth. Do you know what a counterexample is? If there is even one example that shows that this is false, then there is no necessary link between the two statements. Period. Now, you could modify your claim that there is a correlation between the two statements, or that most of the time it is true. But I'd still dispute that. There are many more qualified members of this forum that could debate on that particular point.
mustang19: If that happened in real life, that is.
I will direct you to the financial cost of the War on Terror. Yes, the link is to the page on the Iraq War, but I will quote a very relevant passage:
The costs of the War on Terror are often contested, as academics and critics of the component wars (including the Iraq War) have unearthed many hidden costs not represented in official estimates. The most recent major report on these costs come from Brown University in the form of the Costs of War project,[1]which said the total for wars in Iraq, Afghanistan, and Pakistan is at least $3.2-4 trillion.[2] The report disavowed previous estimates of the Iraq War's cost as being under $1 trillion, saying the Department of Defense's direct spending on Iraq totaled at least $757.8 billion, but also highlighting the complementary costs at home, such as interest paid on the funds borrowed to finance the wars and a potential nearly $1 trillion in extra spending to care for veterans returning from combat through 2050.[3]
So, yeah. It has happened in real life. And that of course we should not forget such monstrosities as the Big Dig:
The Big Dig was the most expensive highway project in the U.S. and was plagued by escalating costs, scheduling overruns, leaks, design flaws, charges of poor execution and use of substandard materials, criminal arrests,[2][3] and even four deaths.[4] The project was scheduled to be completed in 1998[5] at an estimated cost of $2.8 billion (in 1982 dollars, US$6.0 billion adjusted for inflation as of 2006).[6] The project was not completed, however, until December 2007, at a cost of over $14.6 billion ($8.08 billion in 1982 dollars)[6]as of 2006.[7] The Boston Globe estimated that the project will ultimately cost $22 billion, including interest, and that it will not be paid off until 2038.[8] As a result of the deaths, leaks, and other design flaws, the consortium that oversaw the project agreed to pay $407 million in restitution, and several smaller companies agreed to pay a combined sum of approximately $51 million.[9]
Maybe the amount of waste is small on an individual level, but all of these projects add up.
Mustang, did you notice that the paper talks about the governor or president, but does not mention legislators? It looks like you choose to ignore one third of the governing forces. If you really want to conclude anything of significance, you should ignore such papers.
Before anyone jumps on it, clearly I'm implying that this $10 trillion is derived from monetary inflation and taxes.
, then the GDP growth figure for that period will balloon long before anyone can actually demonstrate whether this is a good idea
No, it wouldn't, at least not in the timescale covered. The studies cover several decades, more than enough time for negative effects to occur if they ever will.