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The Cost of the Welfare State

jimtimmy
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1/6/2012 10:48:01 PM
Posted: 4 years ago
Over the course of the past 30 years, the USA has both grown faster, per capita, than most western European nations and started out at a higher level of income. This is not to be expected, as standard economic theory predicts that countries that start with lower incomes will grow faster than those that start with higher incomes. This is known as the "catch up" effect. And, it does occur if all else is equal. But, not all else was equal. Over the past 30 years, the USA has had a government that taxes and regulates less than the governments of western Europe.

To be fair, some western European nations have undergone free market oriented economic reforms. These include nations like the UK and Ireland. Other western European nations, particularly those in Scandinavia, have been able to create social democratic economies where the welfare state does not do major damage to work incentives and labor market regulations do not hurt employment too much. However, this only happened after some pro market reforms in these countries in the 1990s. Perhaps more importantly, these countries have small, ethnically homogeneous, and more collectivist populations. This makes welfare statism do far less damage to economic growth in these countries, even though it still does some damage.

Some European countries, however, have had both a large welfare state and diverse, large populations that do not fit particularly well with the welfare state. Although, a larger welfare state in the USA would probably be far worse, as the USA has a much larger and more diverse population than any European nation.

Despite the fact that both catch up effect and demographics would predict that most western European countries would have been growing faster than the USA, per capita, over the past 30 years, the USA has still grown faster than nations like France, Germany, and Italy. These also happen to be the nations that have both large welfare states and large, diverse populations. As this chart of GDP per capita in these nations show, the USA has seen stronger growth in GDP per capita from 1980 to 2010, despite starting at a higher level:

This is an interesting phenomenon. The failure of a number of European nations, particularly the ones with larger welfare states, to continue gaining ground with the US over the past 30 years, and, in fact, they have been losing ground, is an interesting phenomenon. It is important to understand exactly how this is happening. GDP per capita is a function of two things, productivity and labor supply. Productivity is typically measured as GDP per hour worked (total GDP divided by total hours worked), and labor supply is typically measured as hours worked per capita (total hours worked divided by total population). Hours worked per capita multiplied by GDP per hour worked gives you GDP per capita. A simple look at the numbers shows that the gap between these European countries and the USA is not the result of slow productivity growth. This chart shows GDP per hour worked in these countries over the past 30 years:

As this chart shows, GDP per hour worked, the measure of productivity, started and grew at about the same level in these various countries. Therefore, it is obvious that this is not the cause of the growth or output gap between these European nations and the USA. This should mean that the gap between the USA and these nations is labor supply. This chart of hours worked per capita in these various countries seems to confirm this:

As the chart shows, the USA both started and ended with a large labor supply. The USA saw a large increase in labor supply from 1980 to 1995, during the era of Reaganomics, but then labor supply declined from 1995 to 2010. The reason for this is the recent recession that has decreased labor supply substantially, and somewhat artificially, in the USA. Germany and France saw significant declines from 1980 to 1995, and they then saw small declines from 1995 to 2010. Italy saw a moderate increase during both periods, but Italy also had very low levels of labor supply to begin with, mostly due to extreme labor market policies in the 1970s and early 1980s.

So, there are different explanations for the differences in labor supply between countries. The evidence seems to suggest that it is a mix of high taxes, large welfare programs, unions, and labor market regulations that cause the difference. The largest cause seems to be taxes. This chart shows taxes as a percentage of GDP in these countries during the past 30 years:

Except for Italy in 1980, when extreme labor market policies were in place, and the USA in 2010, when a major recession caused an unusually large decline in labor supply, taxes seem like a pretty good predictor of hours worked per capita, just as theory would predict. So, the income gaps caused by the lower labor supply in these European nations is the price of higher taxes, larger welfare states, stronger unions, and tighter labor market regulations.

In fact, it is probably worth noting that the cost of these policies for the USA is probably higher, given that the USA's diverse, large, and individualistic population is so ill fitted for welfare statism.

(this is from my blog: http://marginalcost-jim.blogspot.com...)
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Wnope
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1/6/2012 10:54:49 PM
Posted: 4 years ago
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?
jimtimmy
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1/6/2012 10:59:08 PM
Posted: 4 years ago
BTW, there are supposed to be charts here. But, you have to click on the link at the bottom to see this with accompanying charts that I made.
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jimtimmy
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1/6/2012 11:00:03 PM
Posted: 4 years ago
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.
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Wnope
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1/6/2012 11:02:24 PM
Posted: 4 years ago
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...
Wnope
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1/6/2012 11:04:23 PM
Posted: 4 years ago
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

Do you know what the actual correlation number is between growth in nations and growth/size of welfare state? Or do you just have that chart.
16kadams
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1/6/2012 11:05:08 PM
Posted: 4 years ago
didn't you prove welfare=better economy?
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"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
OMGJustinBieber
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1/6/2012 11:12:26 PM
Posted: 4 years ago
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.
darkkermit
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1/6/2012 11:18:16 PM
Posted: 4 years ago
I think standard economic theory demonstrates that there are tradeoffs between economic growth and welfare.

The more you subsidize non-workers, the more of them you'll have and the less incentives those who produce more will have. We all intuitive realize that If everyone was paid equally, regardless of production output, that gross domestic production would drop dramatically, so there's no reason to believe that welfare would not have the same effect.

but as OMG mentioned, its a question on how you value gini coefficient over gross domstic production.
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jimtimmy
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1/6/2012 11:31:02 PM
Posted: 4 years ago
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.
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jimtimmy
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1/6/2012 11:33:19 PM
Posted: 4 years ago
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.

That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.
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Wnope
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1/6/2012 11:35:45 PM
Posted: 4 years ago
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.
jimtimmy
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1/6/2012 11:35:57 PM
Posted: 4 years ago
At 1/6/2012 11:05:08 PM, 16kadams wrote:
didn't you prove welfare=better economy?

Huh?

I think I proved that a large welfare state means a worse economy. What do you mean?
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16kadams
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1/6/2012 11:37:40 PM
Posted: 4 years ago
At 1/6/2012 11:35:57 PM, jimtimmy wrote:
At 1/6/2012 11:05:08 PM, 16kadams wrote:
didn't you prove welfare=better economy?

Huh?

I think I proved that a large welfare state means a worse economy. What do you mean?

kk I'm tired and read things dyslexic when I am tired. No joke. I need a coke a cola.
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
jimtimmy
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1/6/2012 11:39:01 PM
Posted: 4 years ago
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...
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jimtimmy
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1/6/2012 11:40:26 PM
Posted: 4 years ago
At 1/6/2012 11:37:40 PM, 16kadams wrote:
At 1/6/2012 11:35:57 PM, jimtimmy wrote:
At 1/6/2012 11:05:08 PM, 16kadams wrote:
didn't you prove welfare=better economy?

Huh?

I think I proved that a large welfare state means a worse economy. What do you mean?

kk I'm tired and read things dyslexic when I am tired. No joke. I need a coke a cola.

Understood. I have really bad jet lag right now.
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16kadams
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1/6/2012 11:44:28 PM
Posted: 4 years ago
At 1/6/2012 11:40:26 PM, jimtimmy wrote:
At 1/6/2012 11:37:40 PM, 16kadams wrote:
At 1/6/2012 11:35:57 PM, jimtimmy wrote:
At 1/6/2012 11:05:08 PM, 16kadams wrote:
didn't you prove welfare=better economy?

Huh?

I think I proved that a large welfare state means a worse economy. What do you mean?

kk I'm tired and read things dyslexic when I am tired. No joke. I need a coke a cola.

Understood. I have really bad jet lag right now.

sorry. I have broken finger lag....lol I do not know don't ask.
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
Wnope
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1/6/2012 11:45:08 PM
Posted: 4 years ago
At 1/6/2012 11:39:01 PM, jimtimmy wrote:
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...

Are you sure you posted the right link?

Because this article is just claiming that international differences in labor elasticity have predictive effects on economic stimulus. Namely, increased labor elasticity with regards to changes in tax levels are steeper in America than Europe, those creating the income gap we see between American and Europe.

That goes AGAINST your point. It says that the income gap is due to labor responses to taxes, not size of welfare state. Taxes can increase and decrease for a multitude or reasons. Welfare, however, tends to have a stable effect on taxes with possible periodic increases.
jimtimmy
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1/6/2012 11:48:33 PM
Posted: 4 years ago
At 1/6/2012 11:45:08 PM, Wnope wrote:
At 1/6/2012 11:39:01 PM, jimtimmy wrote:
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...

Are you sure you posted the right link?

Because this article is just claiming that international differences in labor elasticity have predictive effects on economic stimulus. Namely, increased labor elasticity with regards to changes in tax levels are steeper in America than Europe, those creating the income gap we see between American and Europe.

That goes AGAINST your point. It says that the income gap is due to labor responses to taxes, not size of welfare state. Taxes can increase and decrease for a multitude or reasons. Welfare, however, tends to have a stable effect on taxes with possible periodic increases.

The point I am making is that the US-Western Europe income gap is caused by the larger size of European Welfare State. The elements of the welfare state that cause the gap are higher taxes, larger welfare payments, powerful unions, and labor market regulations.

I also argue that the biggest cause is the higher taxes in Europe, which lead to less labor supply because of decreased work incentives. The articles supports this view.
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shift4101
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1/6/2012 11:49:00 PM
Posted: 4 years ago
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.

Jesus probably would have labored all day and night and given his money to the poor, not force people to adapt to the stipulation of his beliefs. He is more of a core values man, if you know what I mean.

My point is, is that if you care so much about welfare, you should first try to become rich and then give the amount of money that you see fit to the poor. You are in no position to tell other people what to do. I apologize if the rich were such hard working folks. They really should have slacked harder and ignored the opporotunites that were presented to them.
OMGJustinBieber
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1/6/2012 11:49:40 PM
Posted: 4 years ago
At 1/6/2012 11:33:19 PM, jimtimmy wrote:
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.


That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.

Only he does explicitly support one through a mandatory tithe at the very least. We've been over this, it just seems you've conveniently forgotten.
jimtimmy
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1/6/2012 11:53:29 PM
Posted: 4 years ago
At 1/6/2012 11:49:40 PM, OMGJustinBieber wrote:
At 1/6/2012 11:33:19 PM, jimtimmy wrote:
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.


That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.

Only he does explicitly support one through a mandatory tithe at the very least. We've been over this, it just seems you've conveniently forgotten.

No no. I said, in the end of that conversation, that it is clear that it is impossible to determine Jesus's view on welfare statism. Jesus always advocated helping the poor. He also once said that people should pay their taxes without rebellling but not worship the state. This is not nearly enough to assume Jesus wanted the state to steal people's resources, violently, and then give those resources to the poor.
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shift4101
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1/6/2012 11:55:19 PM
Posted: 4 years ago
At 1/6/2012 11:49:40 PM, OMGJustinBieber wrote:
At 1/6/2012 11:33:19 PM, jimtimmy wrote:
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.


That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.

Only he does explicitly support one through a mandatory tithe at the very least. We've been over this, it just seems you've conveniently forgotten.

I never heard of Jesus advocating that we force, violently if necessary, to get the rich to pay higher taxes. He did support a tithe, but it was voluntary. It was/is the right thing to do. But nowhere did he say such a thing was mandatory, and that institutes of men should force eachother to give their money away.
Wnope
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1/6/2012 11:55:54 PM
Posted: 4 years ago
At 1/6/2012 11:48:33 PM, jimtimmy wrote:
At 1/6/2012 11:45:08 PM, Wnope wrote:
At 1/6/2012 11:39:01 PM, jimtimmy wrote:
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...

Are you sure you posted the right link?

Because this article is just claiming that international differences in labor elasticity have predictive effects on economic stimulus. Namely, increased labor elasticity with regards to changes in tax levels are steeper in America than Europe, those creating the income gap we see between American and Europe.

That goes AGAINST your point. It says that the income gap is due to labor responses to taxes, not size of welfare state. Taxes can increase and decrease for a multitude or reasons. Welfare, however, tends to have a stable effect on taxes with possible periodic increases.

The point I am making is that the US-Western Europe income gap is caused by the larger size of European Welfare State. The elements of the welfare state that cause the gap are higher taxes, larger welfare payments, powerful unions, and labor market regulations.

I also argue that the biggest cause is the higher taxes in Europe, which lead to less labor supply because of decreased work incentives. The articles supports this view.

You're creating more questions than you began with. If you want to pursue this line of thinking, I have to ask:

How does relative rates of labor elasticity between America and Europe indicate relative effects of welfare states? The decision to initiate economic stimulus (tax changes) is not being studied here. All that is being studied is a difference between how tax decreases affect the labor force in America versus Europe.

How are tax descreases/stimulus relevant to your argument that increasing the size of welfare (which can occur by shifting current budget as opposed to necessarily taxing individuals) leads to slower economic growth?

Personally, I'm willing to abandon this whole line of questioning if you'll just provide a different empirical source that backs up your DIRECT claim without raising a new set of theoretical questions.
OMGJustinBieber
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1/7/2012 12:00:13 AM
Posted: 4 years ago
At 1/6/2012 11:53:29 PM, jimtimmy wrote:
At 1/6/2012 11:49:40 PM, OMGJustinBieber wrote:
At 1/6/2012 11:33:19 PM, jimtimmy wrote:
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.


That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.

Only he does explicitly support one through a mandatory tithe at the very least. We've been over this, it just seems you've conveniently forgotten.


No no. I said, in the end of that conversation, that it is clear that it is impossible to determine Jesus's view on welfare statism. Jesus always advocated helping the poor. He also once said that people should pay their taxes without rebellling but not worship the state. This is not nearly enough to assume Jesus wanted the state to steal people's resources, violently, and then give those resources to the poor.

Jesus does not validate practices that he considers morally repugnant. He leads by example, and condemns other people for not tithing. If Jesus found the practice unjust he wouldn't have supported it.
jimtimmy
Posts: 3,953
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1/7/2012 12:00:37 AM
Posted: 4 years ago
At 1/6/2012 11:55:54 PM, Wnope wrote:
At 1/6/2012 11:48:33 PM, jimtimmy wrote:
At 1/6/2012 11:45:08 PM, Wnope wrote:
At 1/6/2012 11:39:01 PM, jimtimmy wrote:
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...

Are you sure you posted the right link?

Because this article is just claiming that international differences in labor elasticity have predictive effects on economic stimulus. Namely, increased labor elasticity with regards to changes in tax levels are steeper in America than Europe, those creating the income gap we see between American and Europe.

That goes AGAINST your point. It says that the income gap is due to labor responses to taxes, not size of welfare state. Taxes can increase and decrease for a multitude or reasons. Welfare, however, tends to have a stable effect on taxes with possible periodic increases.

The point I am making is that the US-Western Europe income gap is caused by the larger size of European Welfare State. The elements of the welfare state that cause the gap are higher taxes, larger welfare payments, powerful unions, and labor market regulations.

I also argue that the biggest cause is the higher taxes in Europe, which lead to less labor supply because of decreased work incentives. The articles supports this view.

You're creating more questions than you began with. If you want to pursue this line of thinking, I have to ask:

How does relative rates of labor elasticity between America and Europe indicate relative effects of welfare states? The decision to initiate economic stimulus (tax changes) is not being studied here. All that is being studied is a difference between how tax decreases affect the labor force in America versus Europe.

How are tax descreases/stimulus relevant to your argument that increasing the size of welfare (which can occur by shifting current budget as opposed to necessarily taxing individuals) leads to slower economic growth?

Personally, I'm willing to abandon this whole line of questioning if you'll just provide a different empirical source that backs up your DIRECT claim without raising a new set of theoretical questions.

I don't think you understand my argument. My argument is that specific policies, namely high tax rates, larger welfare programs, stronger unions, and tigher labor market regulation, lead to lower economic growth. I refer to countries that follow these policies "welfare states", because all of those policies are part of the larger welfare states.

So, if it is high tax rates reducing work incentives and decreasing labor supply that causes income gaps, that supports my argument. And, it just so happens that I believe that to the case, and the evidence seems to support that.

And, if it is labor market regulations and unions keeping the labor market inflexible and unable to adjust to new economic conditions while also keeping unemployment high that causes these income gaps, that supports my point too.

And, if it is a mix of these things, that also falls within my argument. Do you see my point here?
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OberHerr
Posts: 13,062
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1/7/2012 12:01:41 AM
Posted: 4 years ago
At 1/7/2012 12:00:13 AM, OMGJustinBieber wrote:
At 1/6/2012 11:53:29 PM, jimtimmy wrote:
At 1/6/2012 11:49:40 PM, OMGJustinBieber wrote:
At 1/6/2012 11:33:19 PM, jimtimmy wrote:
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.


That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.

Only he does explicitly support one through a mandatory tithe at the very least. We've been over this, it just seems you've conveniently forgotten.


No no. I said, in the end of that conversation, that it is clear that it is impossible to determine Jesus's view on welfare statism. Jesus always advocated helping the poor. He also once said that people should pay their taxes without rebellling but not worship the state. This is not nearly enough to assume Jesus wanted the state to steal people's resources, violently, and then give those resources to the poor.

Jesus does not validate practices that he considers morally repugnant. He leads by example, and condemns other people for not tithing. If Jesus found the practice unjust he wouldn't have supported it.

Yes, but an important thing your missing is that 1) He wanted the church to do it and 2) It was voluntary.

Sorry if I'm miss reading, but thats what I got from your posts.
-~-~-~-~-~-~-~-OBERHERR'S SIGNATURE-~-~-~-~-~-~-~-

Official Enforcer for the DDO Elite(if they existed).

"Cases are anti-town." - FourTrouble

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Wnope
Posts: 6,924
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1/7/2012 12:03:15 AM
Posted: 4 years ago
At 1/7/2012 12:00:37 AM, jimtimmy wrote:
At 1/6/2012 11:55:54 PM, Wnope wrote:
At 1/6/2012 11:48:33 PM, jimtimmy wrote:
At 1/6/2012 11:45:08 PM, Wnope wrote:
At 1/6/2012 11:39:01 PM, jimtimmy wrote:
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...

Are you sure you posted the right link?

Because this article is just claiming that international differences in labor elasticity have predictive effects on economic stimulus. Namely, increased labor elasticity with regards to changes in tax levels are steeper in America than Europe, those creating the income gap we see between American and Europe.

That goes AGAINST your point. It says that the income gap is due to labor responses to taxes, not size of welfare state. Taxes can increase and decrease for a multitude or reasons. Welfare, however, tends to have a stable effect on taxes with possible periodic increases.

The point I am making is that the US-Western Europe income gap is caused by the larger size of European Welfare State. The elements of the welfare state that cause the gap are higher taxes, larger welfare payments, powerful unions, and labor market regulations.

I also argue that the biggest cause is the higher taxes in Europe, which lead to less labor supply because of decreased work incentives. The articles supports this view.

You're creating more questions than you began with. If you want to pursue this line of thinking, I have to ask:

How does relative rates of labor elasticity between America and Europe indicate relative effects of welfare states? The decision to initiate economic stimulus (tax changes) is not being studied here. All that is being studied is a difference between how tax decreases affect the labor force in America versus Europe.

How are tax descreases/stimulus relevant to your argument that increasing the size of welfare (which can occur by shifting current budget as opposed to necessarily taxing individuals) leads to slower economic growth?

Personally, I'm willing to abandon this whole line of questioning if you'll just provide a different empirical source that backs up your DIRECT claim without raising a new set of theoretical questions.


I don't think you understand my argument. My argument is that specific policies, namely high tax rates, larger welfare programs, stronger unions, and tigher labor market regulation, lead to lower economic growth. I refer to countries that follow these policies "welfare states", because all of those policies are part of the larger welfare states.

So, if it is high tax rates reducing work incentives and decreasing labor supply that causes income gaps, that supports my argument. And, it just so happens that I believe that to the case, and the evidence seems to support that.

And, if it is labor market regulations and unions keeping the labor market inflexible and unable to adjust to new economic conditions while also keeping unemployment high that causes these income gaps, that supports my point too.

And, if it is a mix of these things, that also falls within my argument. Do you see my point here?

I'm sure that's your general policy.

However, this thread is specifically about the cost of the welfare state with regards to the growth of nations.

If you like, start a thread that talks about the cost of the welfare state AND unions AND taxes (not associated with welfare).

So, in the context of this thread, can you provide any empirical evidence?
jimtimmy
Posts: 3,953
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1/7/2012 12:05:43 AM
Posted: 4 years ago
At 1/7/2012 12:00:13 AM, OMGJustinBieber wrote:
At 1/6/2012 11:53:29 PM, jimtimmy wrote:
At 1/6/2012 11:49:40 PM, OMGJustinBieber wrote:
At 1/6/2012 11:33:19 PM, jimtimmy wrote:
At 1/6/2012 11:12:26 PM, OMGJustinBieber wrote:
Even if your analysis is correct and welfare does hamper GDP growth, what do we do? Before you quickly respond "cut welfare" I want you to ask yourself "what would Jesus do?" and take a serious examination of your own core beliefs.

We've had this conversation before in the religion forum where you admitted that Jesus would not have been an AnCap given his preoccupation with the poor. I don't care if you keep your economic views, just re-examine your moral and religious beliefs.


That is not a correct description of my view on the Jesus issue. My view was that Jesus was a-political and there is no way to determine what his economic beliefs were, because he did not take a position on them. There is no evidence that he would have either supported or opposed a welfare state today. Of course, in an an cap society, people can still help the poor.

Only he does explicitly support one through a mandatory tithe at the very least. We've been over this, it just seems you've conveniently forgotten.


No no. I said, in the end of that conversation, that it is clear that it is impossible to determine Jesus's view on welfare statism. Jesus always advocated helping the poor. He also once said that people should pay their taxes without rebellling but not worship the state. This is not nearly enough to assume Jesus wanted the state to steal people's resources, violently, and then give those resources to the poor.

Jesus does not validate practices that he considers morally repugnant. He leads by example, and condemns other people for not tithing. If Jesus found the practice unjust he wouldn't have supported it.

That's all good and fine. But, my position here is that there is no way to determine Jesus's view on the modern welfare state, so it is pointless to talk about. The BoP here is clearly on you, and I think you would agree with that.

You have shown that Jesus cared about the poor and accepted the existence of the state as legitimate (although he never actually said he supported the state). What you still need to show is that Jesus was for the violent redistribution of wealth that is inherent to the modern welfare state.
President of DDO
jimtimmy
Posts: 3,953
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1/7/2012 12:08:54 AM
Posted: 4 years ago
At 1/7/2012 12:03:15 AM, Wnope wrote:
At 1/7/2012 12:00:37 AM, jimtimmy wrote:
At 1/6/2012 11:55:54 PM, Wnope wrote:
At 1/6/2012 11:48:33 PM, jimtimmy wrote:
At 1/6/2012 11:45:08 PM, Wnope wrote:
At 1/6/2012 11:39:01 PM, jimtimmy wrote:
At 1/6/2012 11:35:45 PM, Wnope wrote:
At 1/6/2012 11:31:02 PM, jimtimmy wrote:
At 1/6/2012 11:02:24 PM, Wnope wrote:
At 1/6/2012 11:00:03 PM, jimtimmy wrote:
At 1/6/2012 10:54:49 PM, Wnope wrote:
Other than pointing out a correlation between economic growth and welfare expenditures as a percentage of GDP, what exactly is your point?

The point is that large welfare states in Europe have hurt economic growth in Europe and will probably hurt even more in the USA.

And the only evidence you present for this causal claim is a simple correlation between welfare size and economic growth?

Sounds familiar...

No, it is a very sound and mainstream economic theory and real world data that support the theory. I'm not gonna have this stupid "correlation never equal causation" discussion again.

I'm not saying your conclusion can't possibly be true, I'm just saying the evidence you are presenting right now is incredibly weak. Come on, there has to be studies out there showing this.

Oh, there certainly are (including a major one from Nobel Prize winner Edward Prescott).

Here is an excellent post summarizing numerous studies on this topic, with links to the various studies:

http://www.nationalreview.com...

Are you sure you posted the right link?

Because this article is just claiming that international differences in labor elasticity have predictive effects on economic stimulus. Namely, increased labor elasticity with regards to changes in tax levels are steeper in America than Europe, those creating the income gap we see between American and Europe.

That goes AGAINST your point. It says that the income gap is due to labor responses to taxes, not size of welfare state. Taxes can increase and decrease for a multitude or reasons. Welfare, however, tends to have a stable effect on taxes with possible periodic increases.

The point I am making is that the US-Western Europe income gap is caused by the larger size of European Welfare State. The elements of the welfare state that cause the gap are higher taxes, larger welfare payments, powerful unions, and labor market regulations.

I also argue that the biggest cause is the higher taxes in Europe, which lead to less labor supply because of decreased work incentives. The articles supports this view.

You're creating more questions than you began with. If you want to pursue this line of thinking, I have to ask:

How does relative rates of labor elasticity between America and Europe indicate relative effects of welfare states? The decision to initiate economic stimulus (tax changes) is not being studied here. All that is being studied is a difference between how tax decreases affect the labor force in America versus Europe.

How are tax descreases/stimulus relevant to your argument that increasing the size of welfare (which can occur by shifting current budget as opposed to necessarily taxing individuals) leads to slower economic growth?

Personally, I'm willing to abandon this whole line of questioning if you'll just provide a different empirical source that backs up your DIRECT claim without raising a new set of theoretical questions.


I don't think you understand my argument. My argument is that specific policies, namely high tax rates, larger welfare programs, stronger unions, and tigher labor market regulation, lead to lower economic growth. I refer to countries that follow these policies "welfare states", because all of those policies are part of the larger welfare states.

So, if it is high tax rates reducing work incentives and decreasing labor supply that causes income gaps, that supports my argument. And, it just so happens that I believe that to the case, and the evidence seems to support that.

And, if it is labor market regulations and unions keeping the labor market inflexible and unable to adjust to new economic conditions while also keeping unemployment high that causes these income gaps, that supports my point too.

And, if it is a mix of these things, that also falls within my argument. Do you see my point here?

I'm sure that's your general policy.

However, this thread is specifically about the cost of the welfare state with regards to the growth of nations.

If you like, start a thread that talks about the cost of the welfare state AND unions AND taxes (not associated with welfare).

So, in the context of this thread, can you provide any empirical evidence?

My definition of the welfare statism is support for high tax rates, large welfare programs, strong unions, labor market regulations, etc.

That is a definition that many others agree with. And, that is the definition that I had in mind when I made this thread and wrote that blog post. If you don't like that definition of the welfare state, then just imagine that I am actually saying high tax rates, large welfare programs, strong unions, and tight labor market regulations whenever I say "welfare state".

Remember, I wrote this thread with the definition of "welfare state" that I had in mind.
President of DDO