In discussions on the optimal size of government, free market vs socialism or variants thereof, some claim that Europe is doing quite well, thank you vis a vis the U.S.
Any thoughts/responses for those making such assertions?
Here's a link to someone often making them: http://seekingalpha.com/user/267315/comment/833989
JeffB:Thanks for the reply. Is the government portion of GDP 45%? Is that including state and local governments as well?
Yes, that include all levels of government. USgovernmentspending.com for more info.
JeffB:I'm sorry, but I don't quite understand what you are saying here. Is it that the bureaucracy here is a higher percentage of the population than in Europe? &/or that a smaller population is better suited to socialism or at least a "Big Government"? If so, why is that so and does the discrepancy in size translate into a very big difference in effectiveness, or ineffectiveness depending upon from which direction one looks?
Bureaucracy doesn't scale. That means that government is more effective with smaller populations, and as government expands, the efficacy of the bureaucracy declines exponentially. For example, take a look at Luxembourg in the charts here: http://workforall.net/EN_Tax_policy_for_growth_and_jobs.html. Why doesn't bureaucracy scale? Well, no organization scales. Companies don't scale too well. Otherwise, with their new economies of scale, they would just keep getting more effective. There are communication, knowledge, and logistical issues.
JeffB:Does Europe have a corporate tax? If so is it significantly smaller than our own?
It's different for each country, but the corporate taxes in Europe are like 15-25% i think. US is at 35%. And it doesn't even bring in that much revenue, so it's pretty dumb. Due to the supply-side effect, reducing corporate taxes to like 20% would bring in the same amount of revenue in several years because of increased private investment, greater incentives to produce, and companies relocating to the states. Capital always will move to locations which have economic freedom.
A state that subsidizes curing people in stead of spending trillions of dollars in blowing things up might have, ceteris paribus, a more healthy people.
The miracle is not 'how does Europe do so well!' but 'how come the USA that blows up (litterly) billions of dollars do so well?
Think of the seen and the unseen; I still prefer public works that make sure the streets perform better than to blow up people. The first one enhances my wealth a bit, the second one doesn't.
The state is not the enemy. The idea of the state is.
US is at 45% of GDP, and a lot of that is basically wasted on military. So the US is basically just as big as European countries. Then add in the fact that Bureacracy doesn't scale, and the 300 million population US population is a hindrance compared to smaller European countries. And the all-important corporate tax rate is very high in the US.
AdrianHealey: A state that subsidizes curing people in stead of spending trillions of dollars in blowing things up might have, ceteris paribus, a more healthy people. The miracle is not 'how does Europe do so well!' but 'how come the USA that blows up (litterly) billions of dollars do so well? Think of the seen and the unseen; I still prefer public works that make sure the streets perform better than to blow up people. The first one enhances my wealth a bit, the second one doesn't.
Thanks. A very logical insight that perhaps should have been self-evident to me.
Sweden is actually surprisingly liberal in important ways, which accounts for its relative wealth. It's worth remembering that 50 years ago or so (correct me) Sweden was the richest per-capita country in the world. Since then, most of the socialist legislation has been enacted, which explains its slip down the league tables.
You absolutely must check this out, at least for the first few pages -- it gets into an annoying war later on:
http://mises.org/Community/forums/t/5616.aspx
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community.
NewLiberty: US is at 45% of GDP, and a lot of that is basically wasted on military. So the US is basically just as big as European countries.
US is at 45% of GDP, and a lot of that is basically wasted on military. So the US is basically just as big as European countries.
Thanks for the reply. Is the government portion of GDP 45%? Is that including state and local governments as well?
NewLiberty: Then add in the fact that Bureacracy doesn't scale, and the 300 million population US population is a hindrance compared to smaller European countries.
I'm sorry, but I don't quite understand what you are saying here. Is it that the bureaucracy here is a higher percentage of the population than in Europe? &/or that a smaller population is better suited to socialism or at least a "Big Government"? If so, why is that so and does the discrepancy in size translate into a very big difference in effectiveness, or ineffectiveness depending upon from which direction one looks?
NewLiberty:And the all-important corporate tax rate is very high in the US.
Does Europe have a corporate tax? If so is it significantly smaller than our own?
There are simply too many uncontrolled variables both at present and from history to make any such causal statements about the current size of government and "doing quite well". And what is "doing quite well" anyway? Who's value judgement do we use to define "well"?
The only way to analyze the relationship between government and the well being of individuals is by praxeology. Statistics are useless, especially when comparing nations where there is not enough of a difference between social institutions. Europe and the US do not have any such difference.
You shouldn't argue with those who claim that one place is better then another. Instead, it is better to argue that if one place is better, then it would have been even better if the government did not interfere so much. So perhaps Iceland is a wonderful place, but if it had not so much government, it would have been a paradise.
NewLiberty:Capital always will move to locations which have economic freedom.
JeffB: In discussions on the optimal size of government, free market vs socialism or variants thereof, some claim that Europe is doing quite well, thank you vis a vis the U.S. Any thoughts/responses for those making such assertions? Here's a link to someone often making them: http://seekingalpha.com/user/267315/comment/833989
Contrary to popular belief, institutionalized aggression doesn't actually make the victims better off. If you take opportunity costs into account, then almost everyone suffers under socialism as compared to social cooperation (capitalism). The fact that a lot of people are well off in Western Europe doesn't mean socialism is the cause of that.
There seemed to be a lot of fireworks this year in Holland. Does that mean we're as good off as we are because we have more fireworks? No, we have fireworks because we are well off. If you want to know why we are well off you'll have to do some more research.
Thedesolateone: Sweden is actually surprisingly liberal in important ways, which accounts for its relative wealth. It's worth remembering that 50 years ago or so (correct me) Sweden was the richest per-capita country in the world. Since then, most of the socialist legislation has been enacted, which explains its slip down the league tables. You absolutely must check this out, at least for the first few pages -- it gets into an annoying war later on: http://mises.org/Community/forums/t/5616.aspx
Thanks. That was a very good link. I took the liberty of rewording some of the ideas in the original post in my reply to the thread I alluded to at the beginning of this thread. I also stole some of the links and some of the answers folks gave me here. The Austrian School doesn't believe in intellectual property rights, correct?
Anyway, thanks everybody. I learned something and tried to pass it along. Hopefully it made at least a little bit of difference to someone or someones.
P.S. What are the buttons for "Suggest and Answer" and "Verify Answer" and how are they intended to be used? What do the points mean and how are they allocated? I use Firefox and it may not show everything. I don't have the ability to use the "More" button, for instance.
DD5:There are simply too many uncontrolled variables both at present and from history to make any such causal statements about the current size of government and "doing quite well". And what is "doing quite well" anyway? Who's value judgement do we use to define "well"?
You have a point, of course, but it's probably human nature to try anyway.
DD5:The only way to analyze the relationship between government and the well being of individuals is by praxeology. Statistics are useless, especially when comparing nations where there is not enough of a difference between social institutions. Europe and the US do not have any such difference.
I'm new to Austrian economic theory, though it feels familiar to me somehow, but in any event am not immersed in the praxeology thought process, though I have at least looked up the definition in Wikipedia. I;m not sure exactly how one might go about explicating things through that perspective from someone who thinks the socialist experiment in Europe is a far greater success than most Americans give them credit for. I realize that statistics and things have their limitations but it seems to me as if they can still be useful in some instances and this seems to be one of them from what I can tell. krazy kaju even used some in the thread he started on the subject. It may not be precise enough for a good economics article, but hopefully it would help at least a little on the level of a dialogue on a discussion forum.
DD5:You shouldn't argue with those who claim that one place is better then another. Instead, it is better to argue that if one place is better, then it would have been even better if the government did not interfere so much. So perhaps Iceland is a wonderful place, but if it had not so much government, it would have been a paradise.
Perhaps, but in this instance, "An American in Paris" has been arguing with people who decry the current governmental efforts at intervening in the US economy as socialism. He's trying to say that claims that socialism is a drag on the economy aren't valid if he sees economies that are considered socialistic outperforming ones he considers capitalistic, free market or Laissez Faire. Maybe I'll get a little better at internalizing things and then in dialogue as I go along.
JeffB:The Austrian School doesn't believe in intellectual property rights, correct?
The Austrian school doesn't have political opinions, it is a school of economics. I don't believe in intellectual property rights as they are a violation of real property rights. Economics is a value free science remember? (Always think of Lilburne's slideshow when I say that now)
JeffB:P.S. What are the buttons for "Suggest and Answer" and "Verify Answer" and how are they intended to be used?
It's "suggest as answer" which may clarify. Basically, if one thinks that that's the right answer, then one can suggest that as an answer to the person who posted the "economics question", and then either the thread-starter/question-asker or a moderator can "verify answer" i.e. confirm that it is a good answer to the question
Thedesolateone: JeffB:The Austrian School doesn't believe in intellectual property rights, correct? The Austrian school doesn't have political opinions, it is a school of economics.
The Austrian school doesn't have political opinions, it is a school of economics.
Thanks. That's a good and important point to remember.
Thedesolateone: I don't believe in intellectual property rights as they are a violation of real property rights. Economics is a value free science remember? (Always think of Lilburne's slideshow when I say that now)
I don't believe in intellectual property rights as they are a violation of real property rights. Economics is a value free science remember? (Always think of Lilburne's slideshow when I say that now)
Is that slideshow online anywhere?
Thedesolateone: JeffB:P.S. What are the buttons for "Suggest and Answer" and "Verify Answer" and how are they intended to be used? It's "suggest as answer" which may clarify. Basically, if one thinks that that's the right answer, then one can suggest that as an answer to the person who posted the "economics question", and then either the thread-starter/question-asker or a moderator can "verify answer" i.e. confirm that it is a good answer to the question.
It's "suggest as answer" which may clarify. Basically, if one thinks that that's the right answer, then one can suggest that as an answer to the person who posted the "economics question", and then either the thread-starter/question-asker or a moderator can "verify answer" i.e. confirm that it is a good answer to the question.
Can there be more than one "verified answer?" It seems to me that on the few threads I've started so far, I'm learning bits and pieces from most of the posts. One may have the correct answer to a portion of the original question and others may have answers to other parts. Or some may clarify things some more, or add additional recommended reading material that may do the same. Sometimes the answer to one question also engenders additional followup questions that might be answered by one or more readers. There might be one answer that stands out, and yet others added real contributions or answered other questions or additional parts and it might seem to be "unfair" to designate only one as "The Answer".
Also, does a designation of "Answered" pretty much end further discussion on the topic in that thread?
JeffB:Is that slideshow online anywhere?
JeffB:Can there be more than one "verified answer?"
JeffB:Also, does a designation of "Answered" pretty much end further discussion on the topic in that thread?
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring