I repeatedly hear (in the US) liberals point to the economic success of governments "like Germany, Norway, Sweden," etc. as proof that socialist/fascist/interventionist government is a successful form of government. I've searched the internet and have gotten a variety of responses from sources with varying degrees of reliability.
Does anyone know a clear cut response to this argument that supports Austrian economics or libertarianism? Any articles or sources that you could point out would be extremely helpful.
jvhockey01: Does anyone know a clear cut response to this argument that supports Austrian economics or libertarianism? Any articles or sources that you could point out would be extremely helpful.
I think the best response would be presenting classic Frederic Bastiat lesson "What is seen and what is unseen".
First off, you should demand from your opponent his definition of "economic success". With high degree of certainty he or she would respond with something like "growing GDP, decreasing unemployment, etc.", which you meet with your counterargument::
" True, but this what is seen,, and there are opportunity costs that are forever forgone and which hardly can be reckoned".
I think, Economics in one lesson would be the best book to start with.
The reason is simple and goes back to I think a Sweedish politician who stated simply that the difference in the amount of economic freedom between the Northern European Social Welfare States: Norway, Sweden, Germany, Denmark, Switzerland, etc and the USA is not as great as you think it is. This is especially true for economic regulation where these states have higher social welfare state burdens but lower amounts of regulation on the back of entrepreneurs. If you look at the world index of economic freedome you can see that barring idiotic labor law in Germany that its economy is more free than that of the USA and they don't was trillions on their military, intelligence and foreign adventurism.
a) These arguments are all based on government statistics. Since the very point in content is whether the government should be meddling in the economy (socialism), this is a bit of a conflict-of-interest within the argument. In general, international statistical arguments are extremely difficult to get right even for less subjective things such as heart-attack rates, and so on. Specifically, there is no credible way to claim that you can meaningfully compare things as broad and sweeping as "socialism" versus "laissez-faire" and come to any binding conclusions. This is the realm of conjecture, anecdote and opinion.
b) Europe is actually the mother of the sophisticated, global culture of private property and industrial production - the Industrial Revolution happened in England and Europe. That these nations are still prosperous despite the boneheaded policies of their governments vis-a-vis third-world countries like Kenya or Burma should not be surprising.
c) The United States shares this same cultural heritage - we are the children of the Enlightenment which happened in France and elsewhere in Europe. So, the comparison between US versus Europe is a bit of a red herring.
d) The United States since at least the time of the New Deal has been a decreasingly laissez-faire economy except compared to monstrosities like Maoist China or Stalinist Russia. We have our property rights and freedoms here but so do people in places like Brazil or India... it just looks different because we have inherited a larger capital stock and the cultures themselves are different. It's ridiculous to argue that the modern American economy with multi-trillion dollar bailouts of the biggest banks, is laissez-faire.
e) European governments are very modest spenders - both in absolute terms and in terms of percent-GDP - by comparison to the United States government. The old line used to be that the US was just "that much more productive" but it's become painfully obvious that this is false since at least 2003 when Bush signed the medicare expansion in addition to starting two wars, one in Afghanistan and another in Iraq. Bush - a Republican - expanded Federal spending to record levels and at a record pace. Obama has continued this trend of breaking records but the Republicans who are now bemoaning Obama's spending increases were nowhere to be found during the Bush era.
Clayton -
The Myth of Scandinavian Socialism
'Men do not change, they unmask themselves' - Germaine de Stael
I think the appropriate "Austrian response" would be to indicate that it's unscientific in the extreme to compare the United States with Western European social democracies as if all the multifaceted relevant factors are being held constant (technology, money supply, capital structure, population, interest rates, etc.) and that the only "dependent variable" being altered is the size of the welfare state relative to the economy. Of course, even if such a comparison was possible you'd still encounter the problem of standardizing the human element, which simply cannot be done; hence, economics can establish qualitative, but not quantitative, principles.
Also, a lot of resources collected on their favorite example, Sweden:
I think you can start by comparing countries like Greece and Sweden. Both have extensive safety nets, yet one is falling apart at the seams.
A big difference between these countries is in capital investment, something the latter has in spades and the former desperately lacks.
So, correlation does not equal causation; because there is social welfare in Sweden, and Sweden is in good economic shape relative to Greece does not mean that social welfare leads to economic success.
Now, it can be taken the other way, in that capital investment is not the only prerequisite for economic success, but I am not necessarily claiming that either.
A major cause of this difference lies in capital investment, something the former has in spades and the latter desperately lacks.
Greece has a high savings rate?
Well, no. What were you inferring from my post? Feel free to prove me wrong though if you're inclined, though I wasn't exactly claiming that the reason Sweden is doing better than Greece is because of the high capital investment there and in countries like France. I should edit my post though since it looks like that's what I'm claiming.'
EDIT: Yeah, I had them switched around. Should be 'the latter has in spades...' etc.
Cortes,
Your post implies that Greece has a higher savings rate than Sweden, which is something that could be true but is a notion that I find fundamentally sketchy.