State Intervention Hinders Economic Growth
In this debate, I will argue that economic intervention by the state does more to hurt economies than help them and that a free market approach is better. My opponent must argue that state intervention does more to help an economy than a free market approach does.
Round 1 is only for acceptance.
No trolling or semantics.
By 'a free market approach', do you mean the policies of Reagan and Thatcher, or the mythical realm of Austrian Economics and Objectivism?
The term 'state intervention' is a little vague too. It could mean anything from nationalising entire industries to the most basic of taxation and services. Please be more precise
I don't think GDP growth is a good enough figure to measure an impact on an economy, so I think we should take into account income inequality, poverty rates, median incomes, crime rates, quality of healthcare, wage growth, etc.; it creates a far more balanced picture of the economy and society, both of which are interchangable.
I appreciate there's something of a transatlantic lexical and cultural divide between us, so if we could agree on terms, it would help the debate to run smoothly.
Could you devote a few sentences at the beginning of R2 so we're perfectly clear as to what we mean by the various terms and parameters?
I thank my opponent for accepting this debate. When we talk economcis, we do talk about policies and how they have affected the world better or worse. For example, FDR and Emperor Diocletian are examples of policies that involved dramatic state intervention in the economy. You would defend these. You mentioned Reagan and Thatcher, both strongly supply-side free market leaders. I will have to defend them. Yes, I do mean policies and not completely free or completely unfree utopias. That would be more difficult to explain. When we talk about policies and state intervention, you are a proponent of those who sought to expand the state into the economy in order to create growth. I am a proponent of those who wished to scale back the state's intervention in the economy to promote growth. Now to the debate.
I. Trajan, the Severan, and Diocletian
The Roman Empire was one of the greatest world powers to ever exist and was generally a free nation for its people. The Romans living in the capital and Italy enjoyed a free market economy and strong property rights. Investments and trade were very widespread in the empire even during times of war. Roman legions were only needed at the frontiers and not internally, which greatly expanded urban trade. Trade was only expanded through one of the earliest forms of private insurance.
All good things must come to an end. Rome's decline has three parts to it starting with Emperor Trajanus Augustus. When he died he was largely beloved, but had started Rome's demise with the first public welfare program dealing with people in poverty. It started the state's obligation to create programs to help the poor. Trajan was followed by his son Hadrian, who also increased government intervention in the economy focused the empire's treasury inward rather than outward on defense policy. At the end of his tenure, Hadrian cancelled any debts on any state loan from the last fifteen years. The loan records were marched out and burned, but this just destroyed all fiscal discipline.
The second part to Rome's decline was the Severan debasement. The Severan was Rome's currency and was largely backed by silver (over 95%). However, more and more emperors debased the silver currency and replaced it with copper, ruining the strong Severan Rome once had. Hubbard and Kane explained what happened next:
"The trick of debasing the currency soon lost its effectiveness once the public figured out what was happening. Merchants responded by raising the prices of goods. Even if the emperor minted some small amount of thinner coins, their existence drove purer money out of the market. People hoarded stronger coins, and spent the weak ones." 
II. Imperial Spain Fades
The year 1492 marked an important year in Spanish history. Christopher Columbus "discovered" America, the Spanish finally defeated te Muslims on the Iberian Peninsula, and the crown decided to ban its economically important Jewish population. Their hope with the ban of the Jews was to create a stronger Spain economically and militarily through one religion.
Spain hoped to expand in the Americas in order to gain more raw materials and wealth. Just like with Rome, silver played a key role. The monarchy kept a fifth of all silver being transported to the mother country and encouraged expansion. This would hurt it in the end. The Spanish monarchy hoped to take as much silver as possible in order to become the richest country in Europe, but silver destroyed Spain because too much of it left the precious metal with less value, thus creating hyperinflation. The monarchy started to control and tax commerce in order to benefit the country's businesses and people. This capital could have been used for more investments into businesses, but it never happened. Fiscal deficits and state bankruptcy became rampant, destroying Spain's attempt at preserving itself as a great power. 
III. FDR's Fail Deal
In 1933, Franklin Roosevelt became president of the United States while the Great Depression was strangling the nation. He decided that in order to save the economy he would put forward his New Deal, a dramatic expansion of the federal government into a largely private sector economy. He sought policies mainly from the Keynesian model of more spending to support workers, but also some from Stalin's totalitarian regime and Mussolini's fascist model. State intervention in the American economy increased massively.
His main economic legislation was the National Industrial Recovery Act, which created over 10,000 new pages of regulations in hope of raising wages to create more demand and prices to increase corporate profits. The top income tax rate was raised to over 70%. Several programs like the CCC, TVA, and AAA were created to support this, but overall the New Deal failed. Unemployment generally remained between 20 and 10$ for most of the 1930s. During its best years, unemployment could go down to 9% but it failed to enduce hope and real growth. In 1937, the economy collapsed a second and unemployment skyrocketed back up. Employment slowed incredibly because of increased labor costs from a high minimum wage. As prices rose, consumption slowed because goods and services became more expensive. Many of those jobs that were created by public works programs were only temporary as people were only hired for a couple months. These jobs that were created were largely inefficent to economic growth.
In some cases, the New Deal sucked up whole industries. As Shlaes says here on utilities:
"Washington sucked up much of the available capital by selling bonds and collecting taxes to pay for the TVA or municipal power plants in towns. In order to justify their own claim that public utilities was necessary, New Dealers also undermined private ulities directly, through laws - not only the TVA law but also the infamous Public Utility Holding Company, which legislated many companies out of existence." 
Free Market Policies
The next part of my debate is giving proven examples of when the government scaled back and took less intervention in the economy.
I. The Roaring Twenties
Presidents Harding and Coolidge both scaled back the government's role in the economy, lowering taxes and vetoing several pieces of legislation that would have expanded the government's role. The top tax rate under their administrations went from Woodrow Wilson's 77% rate to Coolidge's 24% rate. This increased industrial production and output massively. Millions of jobs were created. It is believed that unemployment went from a high of 7% in 1921 to 1% in 1929 with the lowest recorded unemployment rates in American history. As Shlaes explains:
"In July 1921, there had been 5.7 million Americans out of work; now that figure was 1.8 million. Manufacturing output was up a third since that time. Iron and steel production had doubled....The national debt of $28 billion, nearly all war costs, was finally down $17.65 billion." 
The middle class started rapidly expanding and more Americans could afford simple goods. The stock market boomed and many people grew wealthy. Businesses lowered prices and still generated more profit than before. Like:
Cars: 26% to 60%
Radios: 0% to 46%
Electric Light: 35% to 68%
Washing Machines: 8% to 24%
Vacuums: 9% to 30%
Indoor toilets: 20% to 51% 
II. Reagan Ends Stagflation
The 1970s brought an economically devastating period to the world. Presidents Nixon, Ford, and Carter expanded the federal government into the economy, but this failed to end economic woes and stagflation. Unemployment went from 3% at the start of Nixon's presidency to over 7%. Ford and Carter both dealt with high rates. Ronald Reagan became president in 1981 and scaled back the government's role through lower taxes and less government expansion. Reaganomics as well call it today, is supply-side tax cut policies combined with money supply reduction. The unemployment rate went from 11% to 5% when he left office in 1989.
Pesonal incomes of people rose for all classes of society. There 5,000 people with an income over $1 million at the start of Reagan's presidency. When he left that number was over 35,000. Many people were becoming more wealthy during Reagan's tenure. Inflation was also a problem, but it rapidly declined allowing poorer Americans to afford more goods and services. D'Souza notes that this wealth did spread to charity organizations and the people at the bottom:
"Americans who contributed about $65 billion (as measured in 1990 dollars) in charity in 1980 gave more tha $100 billion in annually by the end of the decade, a real increase of 57 percent. The average American who gave $377 to charity in 1980 raised his or her contribution to $493 in 1990." 
III. Thatcher Saves Britain
Conservative leader Margaret Thatcher became the British prime minister in 1979, almost the same time as Reagan. At this specific period, Britain was a socialist country with rapidly declining nationalized industries. In the case of coal mines, over 75% were making losses. There were terrible working conditions for miners. British coal was far more expensive than any other type of coal.
Thatcherism is the British verison of Reaganomics and once again the policies worked. In fact, both the two top political parties in Britain accept Thatcher's policies. When Labour regained power, they kept her policies in place. Berlinski states the benefits:
"Britain is now the world's second-largest producer and exporter of services. What remains of its manufacturing sector is highly competitive." 
1. Glenn Hubbard and Tim Kane, Balace: The Economics of Great Powers from Ancient Rome to Modern America
2. Amity Shlaes, The Forgotten Man: A New History of the Great Depression
3. Amity Shlaes, Coolidge
4. Stanley Lebergott, Pursuing Happiness: American Consumers in the Twentieth Century
5. Dinesh D'Souza, Ronald Reagan: How an Ordinary Man Became an Extraordinary Leader
6. Claire Berlinski, "There is no Alternative": Why Margaret Thatcher Matters
henryajevans forfeited this round.
I have some serious doubts as to the free market nature of Rome, and the proto-welfare state there.
One could hardly describe Ancient Rome as a free market state, or even pre-capitalist. There was rampant slavery in the form of legal ownership, debt slavery and serfdom; a large and complicated taxation and tariff system, and state ownership of land in the form of the Emperor's personal demesne in Egypt, and a shameful record of state violence.
Rome had a welfare state set up by its first Emperor, Augustus, which gave what amounted to a citizen's income to all free citizens, usually in kind. This was called the Congiarium, and this was increased by all of the Julio-Claudian Emperors. The Congiarium was made up of Egyptian grain, as land in Egypt was effectively nationalised under the Emperor's demesne, and many public works schemes were financed by the Emperor personally.
The prescence of major public works programmes are examples of proto-keynesian economics in the Roman Empire, and they illustrate perfectly how the state and the private sector can have a symbiotic relationship with each other. The provincial government would build roads, ports and bridges, which stimulated trade. The projects were too expensive for any individual other than Marcus Licinius Crassus to finance, so the government used slaves to build the infrastructure, and maintained them with labourers and soldiers, which meant that the traders were safe from piracy or banditry, and they stayed in a usable condition. In return, the traders paid a tariff on transporting goods, resulting in a mutually beneficial cooperation between state and government. The same principle also applies to aqueducts, bathhouses and sewers, which improved the quality of life of citizens at the expense of government.
I will not argue that the Severan debasement was not responsible for the downfall, but it seems to be in accordance with the dogma of the IMF, who enforce debasement to boost exports in developing countries by devaluing the currency. It is also unfair to say that there were only two main causes of the downfall of the Roman Empire, as they also include a series of famines and plagues, which destroyed the revenues of the government and caused it to rely on primarily Visigothic mercenaries to staff the border forts on the Rhine and Danube.
(Edward Gibbon - The History of the Decline and Fall of the Roman Empire)
There was also the partition of the empire, which left Rome with the relatively insignificant provinces of Gaul, Africa, Hispania and Britannia, while Byzantium had Greece, Anatolia, Syria, Palestine, Egypt and Cyrenaica, all of which were thriving trading and agricultural centres. This deprived Rome of any real trading partners, since the riches of Persia, Arabia and the Orient were unreachable from the western empire, as well as anything worth trading. This meant that the Byzantine Empire lasted a millenium longer than the Roman Empire.
The hyperinflation was certainly a problem, but it was largely nullified by the fact that very little of the gold and silver actually got to Spain as a result of British, French and Barbary piracy, and the fact that what did arrive was spent on food imports from the Central European Plain, since Spain is a relatively infertile country.
(Richard Overy - The Times Atlas of World History)
The expulsion of the Jews was not a move to religiously unify Spain, but to annul the debts accrued in the Reconquista. The Jews were often creditors to European monarchies, and there is a correlation of debts owed to Jewish moneylenders and the expusion of the Jews. For example, Edward I expelled the Jews from England when he had built some of the world's largest castles in Wales to pacify the population and left the crown with huge debts, and after having exhausted borowing money from Florentine and Genoese bankers, he borrowed money from the Jews and expelled them in 1290, thus nullifying the debt. There was a trend across Europe of this happening.
The downfall of the Spanish Empire was primarily caused by France. The monetary crisis plateaued in late C16/early C17. The absolutist nature of the Spanish state was the architect of its own destruction. Charles II was the result of generations of inbreeding, and consequently was both a poor statesman and infertile, which meant that the closest heir to the throne was also the heir to the throne of France. After the War of Spanish Succession, the heir to the throne of France was forced to renounce his claim on France to become King of Spain, but the influence retained. This was further exacerbated when Napoleon dethroned the King and started a five year Vietnam-style war in Spain that destroyed its economy and killed approximately 100,000 people. This resulted in the colonies gaining independence in the aftermath, and Spain was powerless to intervene.
(A.F.W. Edler – The Spanish Succession War)
III and I
I fail to see the relevance of linking the New Deal to Mussolini and Stalin, it seems like you’re attacking strawmen a little here. I don’t have to support every element of the New Deal; I just have to demonstrate that it had an overall positive effect on the US economy.
Real GDP growth of the US economy over the course of Roosevelt’s first term averaged at 10.87% PA (1), which cumulatively resulted in a growth of 32.61%. Compare that to the entire ‘Roaring Twenties’ (1920-1929), total real GDP growth was cumulatively 35.82% (2). Therefore, in the first three years of the New Deal, real GDP had grown nearly as much as it had during a so-called boom period. In the period 1933-1941, the economy cumulatively grew by 67.68% (3), a phenomenal figure for such a failed set of policies, I’m sure you would agree.
The New Deal also contained several key legislative measures that brought half a century of stability to the US economy and protected America’s middle and working classes.
The National Labor Relations Act, or the Wagner Act, guaranteed private sector unions the right to form, collectively bargain and take collective action. Though it has not been repealed, the government has neglected to enforce it since Reagan, resulting in huge amounts of illegal firings and union busting that amounts to nothing more than class war disguised by a veneer of ‘good business’.
(Noam Chomsky – How the World Works)
The Banking Act, more specifically the Glass-Steagall Act, was another key stabilising measure, as it restricted the affiliation between retail banking and investment banking. This meant that banks could not gamble with peoples’ life savings for the sake of vaporous income made from speculation. This was effectively repealed in the 1980s and since then, the financial sector has been far more prone to crises than the fifty or so years it was operating under the Banking Act.
II and III
Reagan and Thatcher did not save the economies of the US and UK; they merely switched their orientation from the middle and working classes to the upper classes through similar means.
Reagan cut taxes and social spending, which resulted in a huge growth in the national debt (1) and a phenomenal increase in income inequality (2) and poverty (3). There was also a stagnation of real wage growth among the bottom 80% of the population. The same, however, cannot be said for the top 1% (4)
Thatcher introduced similar measures, which did little to dent the national debt as they caused a recession in the early 1990s due to a stock market collapse. This caused riots in 1991 and 1992 on account of unemployment and poverty, which had sharply increased since 1979 (1)(2).
The post-war Keynesian economy that Labour created in the late 1940s gave the UK nearly full employment, an equal society (In 1979, poverty rates were at 10%, and the UK had a GINI coefficient score of .27 (3). Now, its poverty rate is 22% (4) and it has a GINI coefficient score of .41 (5).
In 1972, unemployment in the UK reached one million people out of a population of fifty-six million, prompting outrage among both Conservative Prime Minister Edward Heath and the people of the UK, who saw it as scandalous that a government could allow such high unemployment levels (6). In 2011, youth unemployment alone reached one million out of a youth population of 7.4 million (7).
3) Owen Jones – Chavs: The Demonization of the Working Class
I’ll give some examples in the next round.
"One could hardly describe Ancient Rome as a free market state, or even pre-capitalist. There was rampant slavery in the form of legal ownership, debt slavery and serfdom; a large and complicated taxation and tariff system, and state ownership of land in the form of the Emperor's personal demesne in Egypt, and a shameful record of state violence."
Firmly disagree, as most history of Rome in its early stages and during the Pax show it as remarkably economically free. Slavery existed, but slavery was mainly used among the wealthy landowners. Smaller landowners could not afford slaves, urban workers did not have much need for them, and neither did the merchants. Rome was not ruled by slaves. There was more free labor (and tenant farmers) that existed in Rome that wasn't tied down or killed off until Diocletian.
The taxation system in Rome before the massive increases caused by late emperors was actually pretty simple. The tax system, called the annona, was paid in kind with grain. There was no income tax, just 5% on inheritance and the tariffs were remarkably light and were only interprovinical. Your statement that Rome was not a free market economy is just simply wrong. Property rights and the rule of law ensured such a free market. These made private investments and foreign trade easy. A peculiar law is the collegium. It gave legal status to private groups like corporations, trade unions, and nonprofit groups as well. 
On the Congiarium, the Encyclopedia of Ancient History:
"A congiarium was a type of gift made by the emperor to the populace in the city of Rome. The term derives from a Roman unit of fluid measure, the congius (Quint. 6.3.52)." 
However, a gift is not a regular giving of welfare and it is not an entitlement. Gifts and welfare aid are different. I will also not that these gifts increased over time and received severe condemnation. Trajan and Hadrian were criticized because it drained state coffers. Hadrian also deliberately do this with entertainment in order to distract the citizens of Rome from important issues. [1,3]
Keep in mind that the primary reason Rome fell was because it expanded so much that its treasury could not keep up. The primary expense of Rome was its military. The period of great expansion in welfare programs was when Trajan created his to combat poverty. It increased Rome's obligation and that increased its debt. A three month spectacle of gladitorial games also increase Rome's obligation to indulge its people. In the end, Rome was in a period of state socialism. 
Finally, plagues and famines have never proven to be turning points for any nation. Even the Bubonic Plague was not a main turning point for the death of nations because most European nations survived. By the time of Rome's split, Diocletian already wrecked the economy. Constantine was only doing what he could to save the empire, but decline was inevitable at that point.
The silver Spain received increased its wealth dramatically. Spanish incomes grew fast at this period from $661 to $853, or 29%. It is wrong to say that very little silver (and gold, but not as important) got to Spain because as the Ferguson put it:
"The convoys of ships - up to a hundred a time - which transported 170 tons of silver a year across the Atlantic, docked at Seville." 
The problem is the centralization of silver by the Spanish crown. They never turned this silver into real wealth for the homeland because little went to the private sector and to new industries. Thus, more silver and government constant ignorance in monetary policy led to inflation. It rise in quantity but decreased in value. 
The fact that Spain expelled its Jews is what one of the main problem was because it eliminated and neglected capitalist development. This created a fiscal imbalance in Spain. It is wrong to say that its main intention was not too religiously unify. One simply has to see the years of war between the three religious groups. The issue of debt was simply another reason to do it. However, Spain could still not handle its own finances because it defaulted into debt seven times from 1557 to 1647. Spain still owed debts to people no matter if they were a subject or not. Spain was a war-loving nation, but going to war so mch left little economic production as well. 
Finally, I'd like to say that Spain was no longer a real superpower at the time of Napoleon's reign. It was already economically and militarily weak.
III. The Great Depression
First, I'd like to mention that I addressed Mussolini and Stalin (and Keynes) to address what economic models and plans the New Deal was following. That is why they were mentioned.
"Real GDP growth of the US economy over the course of Roosevelt’s first term averaged at 10.87% PA (1), which cumulatively resulted in a growth of 32.61%. Compare that to the entire ‘Roaring Twenties’ (1920-1929), total real GDP growth was cumulatively 35.82% (2)."
The funny thing here is that my opponent said he was against using GDP growth in round 1 for acceptance. I haven't really used it and I expected my opponent to not do the same. He did, which along with the forfeit of round 2, are signs of bad conduct. Indeed during FDR's first term real GDP and production skyrocketed up, but this is not in quality, profits, or investment. The reason why is better explained and shows signs of little recovery:
"The boom in industrial production of the 1930s signals growth, but not necessarily growth of a higher quality than that, say, of a Soviet factory running three shifts. Another datum that we hear about less than industrial production was actually more important: net private investment, the number that captures how many capital good companies were buying relative to what they already had. At many points during the New Deal, net private investment was not merely low but negative. Companies were using more capital goods than they were buying." 
The 1920s were indeed a boom period, with the lowest unemployment rates in American history and some of the highest growth rates in the Dow Jones Industrial average. During the New Deal, the Dow Jones never recovered from such a low until the 1950s. People had more permanent jobs under Harding-Coolidge years than they did under the FDR years. The New Deal lasted from 1933 to 1939 and real GDP was actually slowing through the decade, down from 9% of his first term to 7% in his second. Then, in 1940 and 1941, the country roared from WW2, not the New Deal. This was because of the Lend-Lease Act and the entrance into the war. During that two-year period, real GDP grew over 17%. Just looking numbers does not tell the whole story.
Beause people did not have permanent jobs and unemployment remained at 20% to 15%, people were not doing so well, especially in the middle and working classes. Businesses gained monopolies over certain products as the NRA put the Blue Eagle in stores and raised prices. So too did larger farmers while tenants were forced to leave. Employment froze and prices discouraged people from buying. That is why the New Deal failed.
My opponent needs to read some history. The Glass-Steagall Act was eliminated in the late 90s with the passage of the Gramm-Leachy-Bliley Act. On Glass-Steagall:
"The proponents of Glass-Steagall also ignore one of the basic rules of finance: diversification generally reduces risk. Given that both commercial and investment banking entail risk, if we want to reduce risk to the federal safety net, then I would suggest that the best approach would be to scale back that safety net. The best way to end bailouts is simply to just stop doing them." 
Reagan and Thatcher
The reason the debt grew during the 1980s was not because Reagan cut taxes, but was primarily due to the Cold War which had to be brought to an end. He succeded in doing that and when he left office the deficit was at 3% where he started (it was 6% in the middle). I have already explained that the middle class saw a huge increase of wealth. The number of millionaires went from 5,000 to 35,000 during Reagan and most of these were from the middle class. As for the poor, they saw their incomes increase from $6,494 in 1980 to $6,994 in 1989. With inflation down, it was easy to buy new goods and products. Mobile phones were first introduced in 1983, but nearly 20 million people owned them by the end of the decade. Over half of the American people owned VCR's from a quarter before Reagan. Real GDP grew at 3.61% during his time in office. This shows that wealth increased during the period dramatically. 
As for Thatcher, she needed to transform the economy from socialist to free market. This is no easy task, but it needed to happen because I pointed out before Britain's industries were becoming ineffcient and unprofitable. No economic transformation is easy, but it is necesarry in order to not devastate the country. The economy Labour created was not sustainable due to economic decline.
1. Glenn Hubbard and Tim Kane, Balance: The Economics of Great Powers from Ancient Rome to Modern America
3. John Bury, The Student's Roman Empire
4. Niall Ferguson, The Ascent of Money
6. Amity Shlaes, The Forgotten Man: A New History of the Great Depression
9. Mark A. Calabria, Did Glass Steagall Put a Man on the Moon. Ludwig von Mises Institute
10. Dinesh D'Souza, Ronald Reagan: How an Ordinary Became an Extraordinary Leader
11. Claire Berlinski, "There is no Alternative": Why Margaret Thatcher Matters
I and II
I think you're scraping the bottom of the barrel a little by giving examples of preindustrial societies - Ancient Rome and Imperial Spain are completely different to societies today, as are their economies. There was no industry, no service sector, no electricity, etcetera; and the argument is largely irrelevant and inconsequential.
I won’t defend statism in precapitalist societies either, since the majority of taxes were spent on foreign wars, building statues and expanding wine cellars rather than healthcare, social spending and infrastructure.
I never said that GDP was an invalid measurement; merely that it was not all-encompassing. All you proved with the quote about net capital investment was the fact that in the aftermath of a banking crisis and during a depression, private investment took a dive, which is hardly revelationary.
I shall compensate by including other statistics from the periods 1920-1929 and 1933-1941
1920-1929 Yearly Average
CPI Inflation - -1.73%
1933-41 Yearly Average
CPI Inflation – 1.61%
Also, your figures on consumer goods growth are superfluous as the introduction of Hire Purchase meant that a large number of the goods were not bought, as debt does not constitute a product; and also that demand dried up at the end of the decade as everybody that could afford (and many that could not) cars, radios and refrigerators had them. Demand did not increase until the 1940s, when industrial capacity had been expanded and cheaper goods could be made in greater quantities. There were also four recessions in the 1920s, more than even today’s supply side economics could muster.
As with all free market ‘booms’, it led to massive regional and class disparities. Agricultural areas were hit by a fall in demand for American agricultural problems in Europe after the farmland in Eastern France and the Low Countries, the area most devastated by fighting and the most productive agricultural area in Europe had been repaired. This led to major hikes in production that damaged the topsoil in the newly cultivated areas and, when paired with a severe drought in the early 1930s, resulted in the Dust Bowl, which destroyed the Midwestern Economy almost irreparably (1). Income inequality spiked during the 1920s as well, with the top 1% of earners owning 19% of the US economy, compared with 8% in 1973 and 17% in 2005 (2). 60% of Americans earned less than $2,000 PA and 40% were below the poverty line (3).7
Reagan and Thatcher
The increased military spending was effectively a corporate welfare project. Reagan was feeding the Military-Industrial Complex by pumping more and more money into the Pentagon, which meant huge contracts for defence companies. There being thirty thousand more millionaires only means that 0.12% of the population managed to earn more than a million dollars. I stand by the real wage statistics provided in R3 that show that despite lowered inflation, real wage growth has been negligible for the neoliberal period.
Examples of Statism
I – The GI Bill
Soldiers’ returning from a major war has meant a glut on the labour force since the Napoleonic Wars. After WWI in the UK for example, there were 1.5 million people unemployed, almost entirely discharged soldiers from the army, which had 4,000,000 soldiers in 1918 and 370,000 in 1920. It would be correct to say that the lost generation of WWI also included the vast numbers of soldiers left to the mercy of market forces in the aftermath. After WWII however, the Servicemen’s Readjustment Act meant that returning soldiers were granted cheap credit, substantial cash payments, federal entitlements and places in higher education. This effectively renovated the American workforce, allowing families that had previously been working class to own their own homes, own their own businesses and live the American Dream. A huge portion of the American middle class can find its origins in the GI Bill.
(Joseph E. Stiglitz – The Price of Inequality)
II – The NHS
Founded in 1948, the National Health Service in the UK is an example of statism at its finest. The state provided health care to all, free at the point of access, and ‘From the Cradle to the Grave’ as William Beveridge, the Liberal Party economist described it.
If we take all industrialised countries, the USA is the only country to leave its healthcare provision to the market, and consequently spends twice as much on healthcare as the UK (1). In the World Health Organisation rankings of health systems, the UK ranked 18th and the USA 38th (2). Contrary to attacks from the American right, it also does not operate ‘death panels’ that euthanize the elderly and the terminally ill. It is more realistic to say that the only death panels that operate are hospitals seeking to profiteer rather than provide an essential service to citizens (3).
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