No, I asked whether government’s share of GDP (which amounts to the same thing as taxation, more or less) affects economic health. But I did not define “economic health” – and in fact defining it is problematic. There is considerable controversy among economists as to how best to measure it. Gorsnak and Plan B would appear to be starting from fundamentally different definitions of it. One conventional measure is GDP (gross domestic product), but another is GPI (genuine progress indicator), which was formulated to provide a “green economics” alternative to GDP – the perceived problem with the latter being that it counts as “product” any instance of money, goods or services changing hands, regardless of the purpose or long-term effects of the transaction. If a state has to triple its police budget and prisons budget to deal with a crime wave, that money is added to GDP. If the EPA has to spend a million dollars cleaning up a toxic-waste spill, that’s counted as an element of “growth.” See http://en.wikipedia.org/wiki/Genuine_Progress_Indicator and http://www.cyberus.ca/~sustain1/Question/GPI.html.
At this site – http://www.redefiningprogress.org/projects/gpi/ – you can view a graph contrasting U.S. GDP with GPI from 1950 to 1999 (the former steadily increases, the latter changes hardly at all).
No cites likely this week, much too busy adding to the US economic health.
But briefly, How did economic health (see OP) become one year’s GDP growth?
Also, what’s with the income distribution numbers? Numbers about the poorest segment of population are very hard to interpret. In the US these are immigrants who are just stopping off for half a generation or so, and welfare recipients/victims, who are usually there for life. Also, when you look at benefits like food stamps, govt. housing, free medical care in public hospitals, underground economy, etc. it’s hard to compare one country with another.
Say what? I gave figures for average annual GDP growth over the past 25 years. How is that one year’s GDP growth? If you’ve got a better candidate statistic for economic health than longterm GDP growth, I’m all ears.
And? Scandinavia has lots of immigrants too. I believe the per capita figures are comparable to the US. And when we look at benefits like free medical care, I don’t think you’ll find the poorest 20% of Americans are getting more than their counterparts in Scandinavia. Sure, the figures I gave aren’t the last word, but are you seriously going to deny that wealth distribution in the US isn’t skewed towards the wealthy compared to socialist welfare states? My point was that looking at per capita GDP is misleading if you’re talking about what the “average Swede” makes compared to the “average American”. I suggested that median incomes are comparable, even if mean incomes aren’t. That is, most people in Scandinavia are pretty much as well off as most Americans, just their upper class is lagging behind yours. I think that’s relevant to discussions of economic health. One might also note that crime correlates very significantly with extreme poverty, and there would appear to be rather less extreme poverty in Scandinavia vs the US. And while crime isn’t directly relevant to economic health, it is surely relevant to social health, and at least indirectly related to economic health given the public costs incurred in increased policing, prisons, removing young men from the work force, etc.
Well, yes, but I’m thinking that the laissez-faire capitalists are unlikely to be convinced by things like GPI. The numbers I gave show that even using their standard measurement, i.e., longterm GDP growth, socialist Norway trounces the US. I’m perfectly sympathetic to the idea that GDP doesn’t capture all there is to capture regarding economic health.
How are those things that make it difficult to compare one country with another? Aren’t they simply things that should be taken into account when making the comparison?
My bad. I shouldn’t try to engage in serious discussions when I don’t have time to read slowly.
Not sure if this is worth mentioning without a cite, but I’m not so sure that Norway is that much more socialist than the US. Also, remember that they have the North Sea oil coming in. Can’t hurt GDP growth.
Also, why didn’t the data include NK, USSR, other bottom dwellers?
I was citing just OECD countries. I freely admit that fullblown communism has been pretty much an economic disaster everywhere it’s been implemented. I don’t see how that’s relevant to the range of taxation levels found in developed capitalist economies.
I’ve always understood that Norway has roughly the same taxation levels as Sweden. Certainly their wealth distribution curve is similar. Cites to the contrary are welcome.
OK, thanks for pointing that out. You limiting your data to countries that IIRC are not all that different. Kind of like studying the effect of height on softball ability and then just including guys between 5’11"’ and 6’1".
I’d include all the countries I could, especially the extremes. Let’s look at Hong Kong, Singapore, on the one hand and the totalitarian countries on the other. I believe you’d find quite a strong correlation, as the OP asks about. But leaving out data that contradicts your point of view is not science.
The OP is asking about a point made regarding the Bush tax cuts, i.e., that the difference in taxation levels before and after those cuts is relevant to economic health. I see nowhere in the OP any indication that the question is “Do centrally planned economies work?” The question appears to be “In a modern industrialized mixed economy, does economic health correlate with low taxation levels?” I believe that the data I presented directly addresses that question, and I don’t think that ignoring North Korea misses any relevant information. There is a fairly significant difference in tax levels between the US and various European countries, and if no correlation can be found looking at those data points, then we must conclude at a minimum that variation in taxation between those levels does not correlate with economic health. (I’m not suggesting this has been proven, but merely that the data at first blush doesn’t appear to support the correlation hypothesis.) And, in fact, your post which I initially responded to was alleging precisely that European countries with relatively higher taxes than the US had substantially lower growth. That assertion appears to be in error. The World Bank data regarding economic growth over the past 25 years shows that major European economies exhibit pretty much the same level of growth as the US, despite their higher tax levels.
Now you’re saying that all OECD countries are “not all that different”. Does this mean you’re backing off this statement?
If you want to change the subject to North Korea, fine. Go ahead. I’m not disputing that full-blown communism makes for horribly inefficient economies. I don’t know that there’s anyone that still would. That doesn’t really do much to support the claim made by Sam Stone which forms the jumping off point for the OP, though.
Aside from any of your big theoretical arguments, a lot of government money gets more or less wasted on crap no one needs. Like “jobs bills” that various Senators and Representatives set up. Would that money have vanished had the government not spent it? No.
Instead, we get big highway projects that no one really wants, all so Senator X can claim how much money she brought in. And it’s not all pork either. Part of it goes to government salaries that we don’t otherwise need. In any case, it takes money away from
The Scandinavian countries have some advantages we don’t. First of all, they’re considerably more stable. Claims of high immigration or not, they don’t have the same kind of disruptive (if often transformative and energixing) immigration the US has. And of course, they don’t have nearly as many roups with vastly distinct histories and current social conditions.
lastly, the GPI thing was basically invented as an argument for more taxes, and its criteria is notoriously fuzzy.
Lots of private sector money gets wasted on crap no-one needs either, like huge gluts of advertising, planned obsolence by redesigning new models and overcompensated executives.
But not nearly as efficiently as it might have. True, the money doesn’t dissappear, but we colectively don’t gain as much of a value for it as we could have obtained.
They reduce many social costs (which impinge on economics) and often improve economic transactions in the long run. Aside from which, without the rapid shifts and constant structural changes present in some other economies, individuals can more easily adjust to meet their optimum desires.
I acually agree with many of the things it looks at, but I don’t agree with the calculation and estimates. Nor are many of them really involved in the economic etimates GNP and GDP are for. Moreover, I find it GNP and GDP overlook many aspects of the economy and probably undercount many aspects.
Regardless, this is not exactly my field of study, however, and I will refrain from embarrassing myself by trying to pretend I’m an expert in the field. Simply put: GPI sounds to me an awful lot like it was it was made to fulfill a pre-existing idealized economic model, rather than calculate “real progress.”
I’m not saying the tings they note don’t have costs or don’t affect the economy; they can, in in non-trivial ways. But GPI was intended as an argument for certain nations (certain including the US) to do things like Europe. Even if the data they collected were absolutely accurate, it doesn’t neccessarily indicate the course of action they want to use it for.
This is actually irrelevant in the long run. Companies rationally make choices to do these, and it only works to a limited extent. An inferior product cannot always win out, even with a better ad campaign. Sooner or later it will lose.
Even repeated redesigns only work if that’s what people want to have. People are willing to pay for fashion. So they do. So companies spend to make those fashions. This is not inefficiency or waste, even if you don’t like it.
Ultimately, companies thrive on positive feedback and fail off negative feedback. When the latter exceeds the former, it loses. It can either retool to give customers more of what they want, or die.
Sure, that works in theory, but you can also say that a bloated government will eventually wither and die as people move to countries with better governance or overthrow it. In the real world, there are plenty of companies who are run grossly inefficiently because all of their competitors, if they have any, are also run similarly inefficiently and the barriers to entry are high enough such that it discourages additional competition.
And I’ve pointed out in another thread a while back that it’s possible in theory for a government enforced monopoly to be run more efficiently that a free market ogliopoly because they can spend less on advertising and pointless rebranding.
