catallaxy files

catallaxy in technical exile

Scandinavia vs the US round 101

with 47 comments

Earlier in the week, Don Arthur posted a link to Jeff Sachs’ article in the Scientific American arguing that the Scandinavian countries’ social democratic model is superior to the Anglo-American model in economic performance and that this refutes Hayek’s well known ‘road to serfdom’ argument.

The Wall Street Journal has published a response to Sachs by William Easterly (no link available – hat tip – JC). Easterly begins by noting that:

…if he had studied (Friedrich) Hayek, Mr. Sachs would realize what “The Road to Serfdom” is really about, and how it is of great relevance to Mr. Sachs’s own current work, which has ironically little to do with what he wrote about in Scientific American. Hayek’s great book is all about the dangers of large-scale state economic planning, courageously written in 1944 when Soviet central planning, technocratic socialism and administrative control of the wartime economy appealed as a peacetime model to many New Dealers, celebrity economists and policy wonks of all stripes.

More important is Easterly’s response to the now oft-cited Scandinavian v Anglo-American economies comparison:

Mr. Sachs’s empirical analysis purports to show that Nordic welfare states are outperforming those states that follow the “English-speaking” tradition of laissez-faire, like the U.K. or the U.S. Poverty rates are indeed lower in the Nordic countries, although the skeptical reader (probably an ideologue) might wonder if the poverty outcome in, say, the U.S., with its tortured history of a black underclass and its de facto openness to impoverished but upwardly mobile immigrants, is really comparable to that of Nordic countries.

Then there is the big picture, where those laissez-faire Anglophones in, first, the U.K. and, then, the U.S., just happened to have been the leaders of the ongoing global industrial revolution that abolished far more poverty over the past two centuries than a few modest Scandinavian redistribution schemes. Mr. Sachs apparently thinks the industrial revolution was led by IKEA. Lastly, let’s hear from the Nordics themselves, who have been busily moving away from the social welfare state back toward laissez-faire.

I think Easterly is certainly on to something when he notes that the comparisons do not take account of the fact that at least the US is more or less porous to regular inflows of poor people from its closest neighbours (not to mention the still unresolved generational problems of the black underclass). But is this sufficient to ‘explain away’ the differences in economic performance or is there a genuine empirical puzzle to be resolved?

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Written by Admin

November 16, 2006 at 11:24 am

Posted in Uncategorized

47 Responses

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  1. Jase,

    Is Road to Serfdom where Hayek makes his prediction about the UK that is as good as Marx’s in Das Capital?

    Having said that one can make silly predictions but still be correct in the overall sphere.

    Bring Back CL's Blog

    November 16, 2006 at 11:48 am

  2. damned you’re slow Homer. The article just explained that Hayek was talking about trends towards more economic planning and not provision of welfare as such.

    Do you actually think before you post a comment?

    Jason Soon

    November 16, 2006 at 11:50 am

  3. Jase,

    I wasn’t sure in which of the books it was in.
    I am presuming this is the one.

    Bring Back CL's Blog

    November 16, 2006 at 11:59 am

  4. Yeah my point was the book doesn’t say what you claim it says.

    Jason Soon

    November 16, 2006 at 12:02 pm

  5. I wasn’t claiming that I was asking whether this was the book he made his silly forecast or not?
    That means it is in another of his books.

    Fair go I haven’t read Hayek since University

    Bring Back CL's Blog

    November 16, 2006 at 12:16 pm

  6. No no Homer it is the same book we are talking about and you are still wrong because he didn’t make a silly forecast.

    Jason Soon

    November 16, 2006 at 12:18 pm

  7. What about the UK becoming a socialist state?

    Bring Back CL's Blog

    November 16, 2006 at 12:32 pm

  8. Did he say that? The point of his book was to say that if the UK continued its then trends in economic planning it would head towards the road to serfdom.

    That was what the article was trying to say – the prediction was over trends in economic planning, not trends in welfare provision:

    “…if he had studied (Friedrich) Hayek, Mr. Sachs would realize what “The Road to Serfdom” is really about, and how it is of great relevance to Mr. Sachs’s own current work, which has ironically little to do with what he wrote about in Scientific American. Hayek’s great book is all about the dangers of large-scale state economic planning, courageously written in 1944 when Soviet central planning, technocratic socialism and administrative control of the wartime economy appealed as a peacetime model to many New Dealers, celebrity economists and policy wonks of all stripe”

    Jason Soon

    November 16, 2006 at 12:35 pm

  9. central plannig has great attraction to all countries involved in warfare.

    I defer to your greater knowledge but I was certain he made that prediction.

    Memories!!!!

    Bring Back CL's Blog

    November 16, 2006 at 12:43 pm

  10. My favorite part is ‘Mr. Sachs, who is currently best
    known for his star-driven campaign to end world poverty, has apparently spent more time studying the economic thinking of Salma Hayek than that of
    Friedrich.’ Not to mention the picture of Hayek.

    Sinclair Davidson

    November 16, 2006 at 1:03 pm

  11. that is a hayek of a statement

    Bring Back CL's Blog

    November 16, 2006 at 1:12 pm

  12. Not bad Homer. Have you been taking lessons from Borat?

    Jason Soon

    November 16, 2006 at 1:16 pm

  13. I am from Paxstan

    Bring Back CL's Blog

    November 16, 2006 at 1:34 pm

  14. Borat does more jew diligence than I do.

    I haven’t been torah that yet

    Bring Back CL's Blog

    November 16, 2006 at 1:52 pm

  15. Jase thinks Jeffery sachs

    Bring Back CL's Blog

    November 16, 2006 at 1:58 pm

  16. Yes Sinclair, one could spend hours studying Heyak and be very impressed with Selma.

    This related to that piece I put up in the open forum this past weekend from International Bank Credit analyst talking about Sweden…. how the right of centre governmetn is doing a mini Thatcher and cleaning up mess socialism has created.

    Scandinavia has lied about its unemployment problem. It has lied through its teeth. They cover the real figure up by parking the unemployed in different categories. IBCA thinks they have a real unemployment problem of around 30% It also mentions how that region of the world has been steadily moving down the wealth scales for the past 30 years.

    The truth is that sweden has the standard of living of the poorest states in the US these days.

    The problem with comparing such a huge regional country like the US to say Sweden is that i am not sure you end up with a valid picture. The more accurate comparison would be say Sweden to CT and Mass. If you did that the difference is quite striking. Sweded would look quite “poor” in comparison.

    Another figure to ponder is the African- Amercan are about the 5th wealthiest group pf people in the world. Another example of poverty being a very nebulous, relative concept.

    Sachs is not a very good economist if he thinks the US should copy scandinavia.

    lastly but most importantly IQ and the wealth of nations is also very important. Scandi is a high IQ place in a relative sense , so the people are capable of negotiating all those headwinds quite successfully but their smarts may not be enough to stop them sinking in the wealth league.

    JC.

    November 16, 2006 at 2:16 pm

  17. Jc,

    you are well behind the times.
    The OECD has been on about this , older males in particular being on disability pensions when all the evidence points that they should be very healthy.
    Happens here in Australia as well but only Iron Mark talked about it.

    Bring Back CL's Blog

    November 16, 2006 at 3:04 pm

  18. Don Arthur continuing to display his obsession for stealing no matter what the consequences.

    The Swedish economy has a record of being one of the most exploitive of all the developed economies.

    But unlike ours, which seems to be run mostly for the bureaucracy… Swedens is also more heavily slanted towards the outrageously filthy-rich.

    They are pretty smart about the way they do things these guys.

    Since their policies ensured that already-super-dooper wealthy people had it cushie one wonders if the influence of the elite businessmen had something to do with how smart they were in their exploitation.

    You see they would tax your ordinary dumb Swede up past his tits. At extraordinarily high tax rates.

    But at the same time they had the lowest income tax rates around for the big corporations.

    In the pre-1980’s they probably had the lowest corporate tax rates of the traditionally Caucasion-dominated countries.

    Of course I might be wrong about this. Perhaps some of you commies and thief-addicts can set me straight on it.

    That all this stealing and dependence-sponsorship leads to a few bigshots owning pretty much everything is not likely to phase Don or Nick Gruen or any other thief-dreamer who dreams of thieving.

    You see its the stealing thats the thing. Its the stealing thats the addiction.

    All this other JIVE that guys like Don are supposed to stand for is neither here nor there.

    Thieves and House-Slave wannabes.

    And folks like Don just cannot talk about anything else.

    See Don with his elbow on the bar.

    What’s he thinking about?

    Is it that big-titty girl in the corner….

    NOOOOO!

    Dons thinking about stealing.

    See Don deep in sleep.

    Whats he dreaming about?

    He’s dreaming about stealing on a magnificent scale.

    See Don dozing on the couch?

    Whats on his mind?

    Well the dream about all this magnificent stealing on a scale undreampt of by Blackbeard….

    Well you see he got woken up in the middle of it. And it was such a pleasant dream that he’s trying to SNOOZE BACK INTO IT to pick the dream up where he left off.

    There is just no excuse for people actively wanting these massive amounts of churning.

    You all should be very angry at Don.

    He is like someone who finds he is attracted to little boys and instead of getting psychiatric help he decides to join Nambla.

    He will not let these guild-of-thieves fantasies go.

    GMB

    November 16, 2006 at 3:09 pm

  19. That is so funny, GB.

    You’re right, you could put those guy under an anesthetic and they would be still thinking about stealing.

    It’s better than sex for some people.

    JC.

    November 16, 2006 at 4:58 pm

  20. There is plenty enough criticism of the Swedish welfare state – from Sweden.

    The EC long term vision thing is looking shaky;

    “Its ally America, focussing all its attention on the rising giant of Asia, will tend to distance itself more and more from Europe, according to the EDA.

    “Relatively poorer, older and more anxious about its security, Europe may also find itself increasingly alone in confronting the problems of a difficult neighbourhood.”

    “Europe … must take to heart the facts that US is outspending Europe six to one in defence R and D, that it devotes some 35 percent of its defence expenditure to investment (from a budget more than twice as large as that of the Europeans combined) as against the European level of about 20 percent and that it is increasingly dominant in global export markets”.

    http://tinyurl.com/y7peeb

    rog

    November 16, 2006 at 9:24 pm

  21. Good points Rog

    this comes from teh futurist blog. If you’re European read it and weap.

    All those wnat to be more Euro. Think about what you want , you may end up getting it in spades.

    see link: http://futurist.typepad.com/my_weblog/

    The US Economy Today – Amazing Resilience
    Over the last 3 years, the US has averaged 3.5% annual GDP growth, which is exactly at the long-term trendline. The unemployment rate is lower than it has been for 35 of the last 38 years, with seven million jobs being created in the last 3 years. What is remarkable is that in this period, a number of factors that have caused recessions in the past have occurred, even as new negative forces have simultaneously emerged, and all these have not derailed economic growth. But does this mean we could be growing even faster, had these problems not emerged? Let us look at all the bullets that did not manage to do the damage that they once did, and the new bullets that we have successfully endured.

    1) Terrorism and War : Depending on how one measures it, the Sept. 11, 2001 terrorist attacks cost the US economy anywhere from $200 to $800 billion. In addition, it worsened the recession on 2001-02, and still slows the productivity of the US economy through longer lines at airports, increased security expenditures, difficulties that law-abiding foreign tourists face in getting visas to enter the US (costing us over $100 billion a year in tourist revenue from those who opt to vacation elsewhere), etc. This is effectively a new tax that we will be paying in perpetuity.

    While the War on Terror has still cost the US just 3000 troops in 5 years (vs. 50,000+ in VietNam and Korea), the media coverage and resultant burden on the psyche of the US consumer today may comparable to what it was during the VietNam War. Add to that the threat that Americans could be killed in the US mainland when they least suspect it. This lingering fear makes consumer confidence lower than it should be.

    2) Oil Spike : When oil reached $90 in today’s dollars back in 1980, this caused a very deep recession, even though prices quickly dropped after that. In 2006, oil reached $78 per barrel before dropping, without causing a recession. In fact, it appears that sustained prices near $60/barrel are not sufficient to cause a significant drag on the US economy. This is partly because of the US economy evolving to a state where a large portion of output is based on innovation and technological advancement, which are much less tied to oil prices. An oil spike hurts GM and American Airlines much more so than it hurts Google and Microsoft.

    Read : $70+/barrel oil, the non-crisis.

    3) Massive Natural Disaster : Hurricane Katrina was the largest natural disaster the US has been struck with in several decades, with the direct economic costs of a major city being submerged with water compounded by the displacement of hundreds of thousands of people and the economic activity they generate. It cut the GDP growth of Q305 down to 1.8%. But in the next quarter, GDP bounced back smartly to 5.6%. The US economy adapted to the shock in a very short time.

    4) Corporate Scandal Tax : While scandals like Enron and Worldcom could happen in any era, the resultant Sarbanes-Oxley (SOX) legistation has proven to so oppressive to law-abiding corporations that the economic cost exceeds the implosion of Enron and Worldcom by a large margin. Medium-sized public companies have to pay an estimated $3 million per year to comply with SOX, which is money that could otherwise go towards R&D, or passed onto shareholders. Estimates on the total opportunity cost of SOX over the last 3 years run as high as $1 trillion. Hopefully SOX can be scaled back for medium-sized enterprises with under $1 billion in annual revenue.

    5) Trade Deficit : The US trade deficit, or the amount by which imports exceed exports, is not entirely a negative economic force, but it currently is over 5% of GDP, vs. just 2% of GDP in the mind-1990s. This reduces the total US GDP growth rate by over 1% a year.

    I do not consider ‘outsourcing’ to be a negative for the US economy. I consider it to be a positive, for reasons that will be discussed in another post.

    Despite all this, the US economy has continued to grow at 3.5% for the last 3 years. It almost appears that forces that would traditionally cause a recession are running out, with only three remaining :

    1) Housing Bust : The effect of this could be similar to the stock-market crash that contributed to the 2001 recession, but as the housing decline is already 1 year on, if a recession does not occur by the end of 2007, the US economy will have successfully digested this correction without a recession. This is a once-in-a-lifetime occurance, just like the dot-com bubble was.

    2) Terrorist attack larger than September 11, 2001. Of course, this may happen tomorrow, or may not happen for several years.

    3) A pandemic like bird flu could cause tremendous economic damage, but the US would still be able to cope better than almost any other country in the world.

    Even then, it sounds too good be true that recessions will be increasingly less frequent in the future. But consider that economic growth is exponential and accelerating, permitting the trendline of economic growth rates to move increasingly higher. The number of quarters in which the US experiences negative continues to decrease as a percentage of all calendar quarters. But what if other parts of the world have accelerated even faster?

    The trendline for World GDP growth is now at a robust 4.5% a year at PPP, and the world economy has not had a year of negative growth since 1973, with almost no year growing under 1% since 1983. A year with negative growth is so many standard deviations between the median 4% trendline that the probability of it occuring in the next several years is mathematically small. In other words, the proportion of years in which world GDP growth is negative continues to decrease, and is approaching zero. A global slowdown would still constitute growth of around 2% a year for a couple of years. Only a calamity such as a major bird-flu pandemic could cause a genuine recession for the world economy.

    But this also means that while the US economy is growing at a strong rate relative to historical trends, it is actually lagging the world economy for the first time in several decades. If the US is chugging along at its long-term 3.5% trendline, the world is accelerating faster. In fact, developing regions by themselves are growing at nearly 7% a year. This graph shows how the developed world has remained steady (with the US exceeding the growth rate of the rest of the developed world) even as developing regions have broken away.

    So in conclusion, the US economy is performing very well relative to historical norms, and this is even more remarkable given the many blows it has taken in recent years. But these blows have taken a toll – and the toll is that the US now lags the growth rate of the world economy by a significant margin.

    JC.

    November 16, 2006 at 9:42 pm

  22. Where do we find that English-speaking laissez-faire? Certainly not in Britain or USA.

    England has not been laissez-faire since 1830 and the trade unions slowly strangled the nation during the 20th century until Thatcher turned up. Same story with nationalisation after WW2. See some extracts below from Koestler’s account of postwar Britain.

    On the USA, the New Deal delivered zero growth for a decade in the 1930s, then there was extra regulation and intervention postwar, and that was before the Great Society, affirmative action and the EPA.

    Sweden had zero tariffs that forced the private sector to compete with the world, delivering dynamic performance and world leaders in some sectors.

    Now for some stories about laissez-faire in Britain.

    Koestler’ essay “The Lion and the Ostrich” described how the class structure of England and the mentality of the workers and the “toffs” made Britain the sick nation of Europe after World War 2. This is a remarkable achievement because Britain in the Victorian era was described as the workshop of the world, ruler of the ocean waves and arguably the premier world power.

    Koestler reported that in the period 1950-55 British exports increased by 6 per cent while those of the Common Market grew by 76 per cent. The comparative figures for the following five years were 13 per cent and 63 per cent. Through the 1950s no industrial nation had a lower growth of per capita output than Britain and the growth of the national income of the Common Market countries doubled that of Britain.

    In 1956 a Merseyside dispute between joiners and metal-workers about who should drill the holes in aluminium sheets led to a strike which lasted six months and attracted national attention. It was regarded as a kind of music hall joke, an endearing quaintness of characters out of Dickens. Two years later,The Times reported that four hundred men had to be dismissed as redundant, eleven thousand were threatened with the same fate, that production on three vessels and a submarine had to be postponed indefinitely because the boiler-makers and the drillers could not agree who was entitled to use five stud-welding guns designed to weld nuts and thimbles to metal plates. It then transpired that the use of this quick and efficient method had been prevented by this dispute between the two unions for the last twelve years.

    Laissez-faire?

    Rafe Champion

    November 16, 2006 at 10:41 pm

  23. “how the right of centre governmetn is doing a mini Thatcher”

    Very mini. So mini, I’d hesitate to invoke the Iron Lady at all. Maybe a mini-Howard?

    “Scandinavia has lied about its unemployment problem. They cover the real figure up by parking the unemployed in different categories.”

    As does every country on earth. Australia with disability pensions, for example. Not to mention the atrocious method of 1 hour a week counting as employed. The US parks millions of people in their prisons and army who would otherwise show up on unemployment lists, and has masses of under-employed people.

    “The truth is that sweden has the standard of living of the poorest states in the US these days.”

    Whoa. You can look at GDP per capita for poor US states and the same for Sweden and get similar numbers, but that hardly tells the whole story. You certainly cannot equate “standard of living” with GDP figures. Average wages, access to and quality of housing, education, medical care, etc are better indicators of “standard of living”. Look at the HDI – the top five countries are Norway, Iceland, Australia, Ireland and Sweden. The US comes in at 8th, UK at 18th, NZ 20th, Hong Kong 22nd, Singapore 25th.

    fatfingers

    November 17, 2006 at 12:01 am

  24. “The US parks millions of people in their prisons and army who would otherwise show up on unemployment lists, and has masses of under-employed people.”

    You really are a dope, aren’t you? You actually think the US has a policy to jail people so they can be kept off the job line. Sometimes I shudder at the total stupidity of the left. Which states run with this policy? There are few federal crimes in comparison, so it must be the states that follow this awful policy. Is it New York? Is it California? How about Washington State? Oh I get it, they’re all in cahoots.

    “As does every country on earth. Australia with disability pensions, for example. Not to mention the atrocious method of 1 hour a week counting as employed.”

    A pathetic Strawman. Of course Australia has a labor market problem, we had a soviet style command system… less so now.

    “Whoa. You can look at GDP per capita for poor US states and the same for Sweden and get similar numbers, but that hardly tells the whole story.”

    And the whole story is what genius?

    “You certainly cannot equate “standard of living” with GDP figures. Average wages, access to and quality of housing, education, medical care, etc are better indicators of “standard of living”. Look at the HDI – the top five countries are Norway, Iceland, Australia, Ireland and Sweden. The US comes in at 8th, UK at 18th, NZ 20th, Hong Kong 22nd, Singapore”

    Seeing we are moving the goal posts. There is a Dallas Fed study done on this very topic. The US came ou streets ahead of nearly all countries. You can look it up if you like. I can’t be bothered linking it.

    Here is a question for you, Julius Sumner- Miller.

    The US has created 40 million new jobs in the past 25 years and 6 million in the past 6 years. Europe has not created none, why is that?

    JC.

    November 17, 2006 at 12:22 am

  25. Fats

    Stay away from this crap because you know nothing about it and just shoot off crap you get from green left weekly.

    JC.

    November 17, 2006 at 12:24 am

  26. The people in the miss delta have bigger homes the Europeans have.

    JC.

    November 17, 2006 at 12:25 am

  27. Well I’ll say it, even if no-one else wants to.

    Despite the taxes, government etc. Sweden is a good place to live (including economically). Even if it isn’t better than other places based on the various arguements (any they really are just arguments vs. obvious observations), it isn’t too bad.

    Also, maybe you haven’t noticed this JC, but bubbles always go longer than they could. I personally wouldn’t discount the effects of a deflating US housing bubble right now. In addition, speaking of foriegn debt, I doubt owning 1trillion dollars to China (and growing) is an exceptionally wonderful proposition either.

    conrad

    November 17, 2006 at 6:08 am

  28. I think the point here Conrad is that the citizens of a welfare state would have better welfare if they did not live in a welfare state.

    The fact the the EC are worried about their fragile defences is one indicator – the pathetic size of their economy is another.

    Australias WorkChoices has not resulted in mass sackings and extended poverty whilst Swedish Social Democrat govt lost power principally on unemployment.

    http://www.economist.com/PrinterFriendly.cfm?story_id=7880173

    rog

    November 17, 2006 at 7:11 am

  29. “You actually think the US has a policy to jail people so they can be kept off the job line.”

    No, I don’t. I merely point out that the high prison population depresses the unemployment figures.

    “Seeing we are moving the goal posts.”

    Huh? You make a specious claim about standard of living, and I point out you could be wrong. Where is the goal post movement?

    “There is a Dallas Fed study…”

    Went to their site and looked at Economic Research Publications but couldn’t find anything about global studies. Does anyone else know what JC’s talking about and can give me a link, please?

    “The US has created 40 million new jobs in the past 25 years and 6 million in the past 6 years. Europe has not created none”

    Talk about moving the goal posts, JC! Who cares if the US creates lots of jobs if it can’t match the standard of living of countries suffering high unemployment?

    “The people in the miss delta have bigger homes the Europeans have.”

    So what? My house in Sydney’s western suburbs is three times the size of Surry Hills terraces, but only worth a third as much. The Swedes are hardly living in hovels, you know.

    fatfingers

    November 17, 2006 at 10:17 am

  30. fatfingers — you have to be careful with that HDI stuff. It’s generally written by people who personally prefer the nordic model.

    Instead of GDP, you should use PPP to take into consideration the costs of living. I liked the nordic countries, but they were bloody expensive.

    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita%2C_2006

    1. Luxemburg
    2. US
    3. Norway
    4. Canada
    5. Ireland
    6. Iceland
    7. Demark
    8. Switzerland
    9. Austria / HK
    10. Australia

    Bare in mind that Noway is an oil nation. Denamrk, Finland (13), Sweden (17) are better examples of the outcomes from the nordic model.

    Personally, I think immigration has a big part to play in the numbers. Not that I think the immgration is bad — but it biases the numbers. If somebody was sufficiently politically incorrect they could compare the nords with WASP americans, aussies & brits. Even that would be biased as immigrant labour will change the WASP wage level.

    John Humphreys

    November 17, 2006 at 10:55 am

  31. Sach’s is doing a Stiglitz and turning into a moron.

    jimmythespiv

    November 17, 2006 at 12:36 pm

  32. …like me with my unneccessary apostrophe……

    jimmythespiv

    November 17, 2006 at 12:40 pm

  33. Australia also has immigration, expressed as migrants 3.85 per 1,000 it is higher than Sweden at 1.66 (of the developed countries Australia has one of the highest migration rates)

    The USA has 3.18 per 1,000

    So its not much of an argument

    https://www.cia.gov/cia/publications/factbook/fields/2112.html

    rog

    November 17, 2006 at 2:28 pm

  34. John, you have to be equally careful with GDP, whether PPP or not. It can’t tell you about average standard of living, or about SoL for the majority. Just look at the Gini indexes – Sweden’s lesser GDP is distributed more evenly, therefore the average SoL could be said to be higher than in the US. And that doesn’t take into account things that suck up resources in the US like inefficient health care delivery, enormous defence budgets, corporate welfare, etc.

    fatfingers

    November 17, 2006 at 3:07 pm

  35. Fats

    What coporate welfare?

    Please define what you mean by this.

    The medical system is the US is the best in the world. It is far superior to what we have. Moreover most of the discoveries made for new drugs are done there.

    As for the defense budget….. Of ocurse they spend more. They are the richest country on earth. Defense spending accounts for 3.5% of the budget.

    The Dallas Fed survey had the US at a higher standard of living by every measure… no of phones, washing machines, dryers, dishwashers, cars, Tv, stereo systems….. size of house.

    JC.

    November 17, 2006 at 3:20 pm

  36. Gini coefficients?

    I don’t know what to make of these anymore FF. In the US for example, roughly 68-72% of GDP is wages and salaries. Furthermore this increases during good times (92-98) and has increased since the 1950’s.

    So what does a less equitable distribution of wages and salaries mean?

    Lower unemployment, greater upward mobility. But in theory you are better off with a less convex Gini curve.

    On the other hand, what is the share of GDP for wages and salaries in the Nordics?

    Furthermore, how do you actually relate this back to concept of distributional efficiency? The US seems efficient, in that a higher proportion of wage earners are earning more as national income rises.

    Mark Hill

    November 17, 2006 at 3:24 pm

  37. rog — your stats back up my argument. Anglos have high migrant intake which makes our stats look worse.

    fatfingers — I don’t pretend that PPP measures standard of living. It can’t measure how much you love living near a beach. But it is a fairly good measure of wealth.

    I don’t know why you think the US health system is inefficient. True, they spend lots of health. That’s not a bad thing.

    The inequality issue doesn’t change the average SoL. But I agree that Swede dole-bludgers have it better than US dole-bludgers. I also wonder whether anglo inequality looks worse because we accept so many immigrants.

    While I think immigrants make our wealth and inequality stats worse, I should point out that I am pro-immigration.

    John Humphreys

    November 17, 2006 at 3:37 pm

  38. What is the use of taxing wage earners and giving them welfare out of it and saying that Sweden is the way to go?

    Thats just silly.

    Sweden didn’t outperform others because of churning.

    Is churning the thing? Is CHURNING the sacred cow?

    Dudes have just got to get away from this addiction to the stealing dream.

    Sweden taxed wage-earners and let big-business of the hook.

    So it outperformed the other interventionist Western states of the time because there was less distortionary income tax levelled on big business.

    Well this sort of thing WORKS.

    But it makes me want to puke.

    There is also the issue of dissipating hundreds of years of cultural capital.

    I mean these people lived for millenium in climates where if you didn’t pull together the whole tribe could perish.

    You would build up some sort of cultural capital in that scenario.

    Imagine if you were banished from village, and left to make it on your own out in the cold.

    Some Swede bragged to Friedman that there was no unemployment in Sweden.

    And Friedman said well thats interesting. There is no unemployment amongst Swedish Americans.

    Now people we have got to be quits with this bullshit which is only derived from theiving addiction.

    We used to hear this exact same JIVE on and on and fucking on about Yugoslavia.

    And its always on the basis that the two people having the discussion know absolutely fucking nothing about the country where the rampant thieving allegedly works.

    “….For example, when allowance is made for the fact that Swedish companies 50% of their profits as a tax-free reserve for future investment………..”

    Reisman goes on to say that the effective tax rate winds up as only 26% as opposed to 34% at the time of Reismans writing.

    And in fact that 34% was a recent thing for the Americans when Reisman was writing this whereas the Swedish tax-lurk for big business and taxing the balls off the worker is likely to have been far more long-standing.

    Now dig this.

    A single family owns a controlling interest in 40% of publically listed Swedish companies.

    Is this what you thief-addicts are into?

    Taxing the vital organs off every poor Joe… And in so doing hurting them and the economy…..?

    ……But having all this capitalism on the sly? And letting the big end of town seal itself off from up and comers with these punitive taxes?

    Just shows what sick fucks you leftists are?

    I’ll bet you are all from filthy rich families. And you all have your inheritance tied up in trusts and stuff.

    And you know instinctively that this sort of thing will dovetail into an effective class-system even in the corporate sector.

    Will you guys tell us what is the attraction with this shit.

    Perhaps I’m missing it. Tax the balls off the worker and spend his money for him on welfare.

    Funny.

    I don’t see the attraction.

    But perhaps you could come over to the factory. We’ll have a union meeting and see if this proposal flies.

    “You guys get taxed at bandits rates, big business gets taxed at low rates and is stiff-armed into keeping a massive tax-free reserve out of their profits…… and it will be good for the economy so shut up and put up with it”

    I don’t think that will fly.

    Who do you people think that this Swedish setup would be helping?

    Or to put it another way: Who are you thief-addicts claiming to be wanting to be helping this week.

    We all know its not the helping that is the thing.

    Its the STEALING that is the THING, that you guys are ABOUT.

    It is you know.

    It really is.

    GMB

    November 17, 2006 at 3:53 pm

  39. What happens when you have high rates of immigration is you have people starting from scratch but rising up but then their place is consequently taken by a new generation of people starting from scratch and so on. You don’t get that when population inflows are more or less static. So it may be that in Europe they don’t get as many waves of immigration but all their immigrants stay poor and they still look more upwardly mobile than us.

    So for being some of the most generous societies in the world compared to these xenophobic hijab-banning Euro-weenies where a much higher percentage of the population could pass any racial purity test, the Anglo American societies get all the bad PR.

    Jason Soon

    November 17, 2006 at 4:01 pm

  40. “What coporate welfare?”

    Farm subsidies, cheap loans, tax breaks, ‘economic development’ subsidies, unpaid royalties, do I really need to go on? The totals vary, but reach hundreds of billions per year.

    “The medical system is the US is the best in the world.”

    It also costs the most, and is relatively inefficient. It also is great if you have money, terrible if you don’t.

    “Defense spending accounts for 3.5% of the budget.”

    What planet are you from?!? Current military spending (DoD + military portion in other departments + supplemental/bridge funding) is a whopping 30% of the 2007 US federal budget.

    fatfingers

    November 17, 2006 at 4:07 pm

  41. One would imagine with the tax setup that I’ve alluded to would make upward mobility of migrants in a place like Sweden just untenable.

    Yet from an economic science point of view its an oddly magnificent setup. While all our guys were going after market share that tax lurk would have kept the Swedes making sure they earned a profit and retained a great deal of the earnings.

    It would have encouraged low gearing and great care in resource allocation.

    And there they are posing as a sort of socialist setup.

    When really they are airbrushed crony-capitalism.

    GMB

    November 17, 2006 at 4:07 pm

  42. Fatfingers will you stop being such a fucking bullshit-artist.

    What is the point of stridently criticising interventionist/socialist measures in the USA when it is the free-market crowd that are against these measures and you aren’t.

    This sounds like some sort of leftist reversal here.

    Or you trying to confuse the issue.

    GMB

    November 17, 2006 at 4:10 pm

  43. I think there are definitely problems with the US health system.

    Jason Soon

    November 17, 2006 at 4:15 pm

  44. “Or you trying to confuse the issue.”

    No, just pointing out the waste of resources. The GDP may be higher, but if it is wasted, then you don’t get a higher standard of living.

    fatfingers

    November 17, 2006 at 4:24 pm

  45. Jase — I’m sure there are problems with every health system, but your detailed analysis of the US system fails to impress.

    fatfingers — I think JC meant to say “…% of GDP” not “…% of the budget”. Was just a typo.

    GMB — fatfingers has always been against corporate welfare. He does get a few things right.

    John Humphreys

    November 17, 2006 at 4:26 pm

  46. “But perhaps you could come over to the factory. We’ll have a union meeting and see if this proposal flies.”

    FMD, Graeme, are you a union organiser in your factory or something?

    Jason Soon

    November 17, 2006 at 4:29 pm

  47. I once was union rep for night-shift.

    But I quit once I got in trouble for trying to retrieve my bet-winnings.

    After that I was compromised. And a good union guy has to be untouchable.

    GMB

    November 17, 2006 at 4:40 pm


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