Thursday, May 25, 2006


A few excerpts

When it comes to government spending, less is more. Less government spending and involvement in the economy - both in terms of regulatory interference and taxation burden - are associated with higher rates of economic growth, better productivity and more diverse markets for products. This is supported by country-specific evidence and several long-running international indices ranking economic environments.

To discount the benefits of the minimal government, the state-reliant opponents of free markets and personal freedom usually argue that while less government may indeed mean more economic prosperity, smaller governments deliver lower quality of public services. In doing so, supporters of the large welfare state usually point to the alleged lack of public services in the US - a myth hardly supported by reality. The supposedly contrasting social-services-in "rich" European welfare states are similarly mythical.

Two recent studies released by UK and Swiss researchers provide some insight into the overall argument: is smaller government better for a country's non-economic well-being?

First, a group of Swiss and Danish researchers from the WIF Institute of Economic Research in Zurich looked at whether government involvement in the economy is conducive to life satisfaction across 74 countries. The results show that life satisfaction actually decreases with higher government spending. This negative impact of the government is stronger in countries with a left-leaning median voter. It is alleviated by government effectiveness - but, crucially, only in countries where the state sector is already small. In general, a one standard deviation increase in government spending yields a median decrease of 4.42 percent in self-reported satisfaction by the voters, a drop in the degree of economic competition of 4.17 percent and a shift in voter preferences in rightward ideological direction of 4.15-9 percent.

Another comprehensive study released by the Centre for Policy Studies (CPS) in the UK summarized available data from various sources, to show that modern governments that spend less can, indeed, provide better public services, a better standard of living and more equitable incomes than high-spending governments....

Not surprisingly, the data show that countries with smaller governments also outperformed those with larger state spending in domestic savings (by over 31 percent), investment (which grew 2.5 times faster in the 1990s in the leaner states), and lending to private sector. Since 1987, the leaner states also say lower inflation and slightly higher wages growth, implying that inflation adjusted wages grew faster in the smaller government states over the last 20 years period. Controlling for the native firms investments abroad, countries with smaller government enjoy the stock of FDI that is twice the size of that found in the states with larger governments. Similar trends hold for private sector productivity growth, private non-residential investment growth and the overall size of the countries' stock markets.

However, contrary to popular beliefs, the better economic and social spending indicators performance by the leaner countries were also associated with the relative strength of their performance in terms of environment. In 1990, states with larger government produced some 0.4 kg pf carbon dioxide emissions per 1 unit of income. By 2000 this figure fell to 0.3 kg. Comparable measures in the states with leaner governments were 0.5 kg in 1990 and 0.4 kg in 2000. On the surface, this appears to be the story of matched improvements across the two types of states with the leaner states continuing to lag behind the larger states. The problem with this arithmetic is that it neglects the vital role of CO2 sinks, such as forests, capable of absorbing the emitted pollutants. Leaner states have 11.6 times greater volume of sinks than the larger states and their forestry areas are increasing at double the rate of forestry growth in the states with large government. Adjusting for the average absorption rates for forestry sinks and relative size of sinks in two groups of countries, the states with leaner government have net CO2 emissions of 0.25 kg per unit of output. This, effectively, is less than the pollution intensity of output that is hoped to be achieved under the Kyoto Protocol.

Overall, the study concludes that "It may be surprising, even counter-intuitive, to find that countries with leaner governments spend more on health and education than those with larger governments (and have been growing that expenditure at a faster rate), that they have a better standard of living, better employment records and similar spending on income support. But the data... should give policy-makers some confidence in arguing [that] ...the leaner governments clearly benefit their citizens more than the narrow illusory benefits offered by larger governments."

The lesson is a simple one. If the real objective of European governments is to improve social and personal well-being, they should lower taxes, cut state spending and let the private sector do its job.



There is an interesting Reuters video just up here of modern day German neo-Nazis that refers to them as "Far Right". The commentary is however careful not to translate the banner being paraded by the "Far Rightists" concerned. It reads: "Unser Sozialismus ist national. Arbeiter der Stirn und der Faust". Translation" "Our socialism is national. Workers of the hand and the head". So a socialist workers' party is "Far Right"??? That the group concerned (the NPD) is Nazi is however totally clear. You can see here that Hitler used exactly the same slogan. Nazism was socialist in the 30s and it is socialist now.

George McGovern criticizes unions and defends Wal Mart!: "I have never wavered in my support for policies that relieve poverty and improve the standard of living of American workers. As a lifelong liberal, I supported Medicare and Medicaid, civil rights, Social Security and workplace safety requirements. Today, I strongly support universal healthcare. And I have always been a supporter of the labor movement. Unions have a proud legacy of improving the lives of millions of workers over the last century. But lately I have seen developments that have me worried. And I have been reminded of legendary union leader John L. Lewis, who was once asked what his miners were after. His answer? 'More.' It was a funny answer, and perhaps it was honest too. But these days, it's not a very effective strategy, and we are seeing some unfortunate and unintended consequences of Lewis' 'more' philosophy."

Supreme Court: Police don't need warrants in emergencies: "The Supreme Court reaffirmed Monday that police can enter homes in emergencies without knocking or announcing their presence. Justices said four Brigham City, Utah, police officers were justified in entering a home after peeking through a window and seeing a fight between a teenager and adults. Chief Justice John Roberts, writing for the unanimous court, said that officers had a reasonable basis for going inside to stop violence. The decision overturned a ruling by Utah's Supreme Court that said a trial judge was correct to throw out charges stemming from the police search."

Senators back useless gesture: "The Senate, eager to stanch the flow of illegal immigrants, signaled overwhelming support Monday for President Bush's plan to dispatch National Guard troops to states along the Mexican border. No tour of duty could last longer than 21 days and troops would be excluded from 'search, seizure, arrest or similar activity.' They would support the Border Patrol, which has primary responsibility for intercepting illegal immigrants."



"All the worth which the human being possesses, all spiritual reality, he possesses only through the State." -- 19th century German philosopher Georg Wilhelm Friedrich Hegel. Hegel is the most influential philosopher of the Left -- inspiring Karl Marx, the American "Progressives" of the early 20th century and university socialists to this day.

The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialistisch)

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