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2013 February 17 Sunday
Young Liberal Big Government Dreams

A New York Times article about young liberals in a pocket of Montana liberalism is entitled Young, Liberal and Open to Big Government. They want the government to help them with education and health care. This merits a bit of discussion.

People who think big government could solve their problems need to understand that government has been big for decades, has generated lots of policies and spending programs aimed at their problems, and yet their problems still exist and, in many cases, are bigger than they used to be. At this point in time big government is already heavily committed with entitlements programs which have unsustainable spending trajectories. Other functions of government (e.g. research, infrastructure, defense) have shrunk as percentages of GDP as liberal entitlements have grown. The US government is running large unsustainable deficits. Tax increases can't be used to try to solve the problems of teenage Montanans because tax increases have to go toward the growing Hispanic lower class and toward senior retirement benefits.

The US government, like many other governments of Western countries, has far over-committed to entitlements for the old and the poor. These commitments can't all be honored. Liberals who want more from government need a time machine so they can go back to the 1960s when the US economy was growing rapidly, average age was much lower, and the welfare state was much smaller. Then they could have satisfied their desire to see education, health, and welfare programs grow. Today when they approach the Leviathan asking for help the economy has far less ability to generate per capita income growth, higher tax revenue, and more taxpayer-funded services.

Since government is resource-constrained liberals need to ask how else can their problems be solved? For example, why does higher education cost so much? Higher education tuition has gone up faster than inflation for decades. More traditional liberal policies will not solve that problem. Actually, liberal policies played a large role in creating the problem. Government loans and grants increase demand and enable universities to charge more. What's the solution? Automation. Coursera, Udacity, Western Governors University, and other online schools are the solution. Slash labor costs.

Then there's health care. The US government has helped drive up health care costs too by both tax and entitlements policies. Government has subsidized demand. Government has also helped restrict competition through credential requirements and expensive drug approval regulatory processes.

If Gail Tverberg and economist Tim Morgan are correct then even with higher tax rates big government will have no capacity to deliver on more liberal dreams and will have to slash what it currently does. A shrinking economy can't fund expansion of the Leviathan.

Share |      By Randall Parker at 2013 February 17 07:44 PM 


Comments
Engineer-Poet said at February 17, 2013 7:58 PM:

... if they're correct, then what?

SHTF said at February 17, 2013 9:07 PM:

"... if they're correct, then what?"

Quite a few NAMs and DWLs will suffer, riot and some will die. Not sure how that is a problem.

AMac said at February 18, 2013 2:47 PM:

> A shrinking economy can't fund expansion of the Leviathan.

"Let's vote for it anyway!" say my family, friends, and blue-state neighbors (SWPL and otherwise). "After all, genius economists like Paul Krugman are in the NYT and on the airwaves, saying that it can and must be done."

Unsaid, the thought continues, "Helping the needy makes me feel virtuous, and lets everybody know that I'm not racist -- not one bit! And since the good deeds are paid for with other people's money, there's no actual sacrifice to factor into the decision."

Check it out said at February 18, 2013 4:49 PM:

"The US government, like many other governments of Western countries, has far over-committed to entitlements for the old and the poor. "

You're kidding, right? The US government, like many other governments of Western countries, has far over-committed to giving big corporations what they want. Charging what they want. Making policy as they want. The U.S. government is one of the least-committed government to its citizens nowadays, specially poor citizens.

I'll tell you a tremendous success story of big government: Hugo Chavez (and please, no insults)

Internally, Hugo Chávez has brought healthcare and education to the people, in just 12 years. Medical consultations are provided for free, medicines are distributed free, 24 hours a day, to the people of Venezuela in the Barrio Adentro programme. The Mercals (state-subsidised grocery stores) provide staple products for reduced prices, making foodstuffs available for all.

Hugo Chavez, apart from his democratic socialist policies which have created a new middle class in Venezuela, a country which was caught in a medieval regime ruled by a corrupt oligarchic clique of elitists, has spread his governance abroad: poorer families in the northern states of the USA can obtain oil cheaper for their energy needs.

And sorry if I over-extend into world politics, but appart from all that, Hugo Chavez has a new vision for world governance: to expand the UN Security Council to include more countries from all regions of our planet; a new policy of transparency with more effective methods of crisis management; the suppression of the anti-democratic veto at the UNSC; the strengthening of the powers of the Secretary-General of the UNO - a re-founding of the UNO with powers which are adequate to handle the issues of today's world.

And certainly there is far more to do. But Hugo Chávez has identified the key question: an educated people can create their own welfare conditions. Of course you've already branded him a "dictator". Well, what dictator is democratically elected, and what dictator educates his people? (Not just K-12)

Fiesta! said at February 18, 2013 5:52 PM:

Check it out said at February 18, 2013 4:49 PM:

So successful, everyone is going to Venezuela!

Randall Parker said at February 18, 2013 7:04 PM:

Check it out.

You really ought to use more data to form your opinions.

Venezuela experienced a surge in per capita income in the 2005-2008 period due to high oil prices. However, Venezuela's per capita GDP peaked in 2008 and has some down a bit since then. Chavez got lucky with the oil price surge. But declining Venezuelan oil production makes continued good times unlikely.

Crude oil production in Venezuela has dropped by about a quarter since 2001, according to data from the U.S. Department of Energy. The industry also suffers from a deteriorating refinery system and accidents, including an explosion that killed at least 41 people in August. Venezuela a decade ago exported gasoline to other nations, including the United States. Now Venezuela imports U.S. gasoline, bringing in a record 196,000 barrels a day of petroleum products in September.

Also, artificially low domestic gasoline prices cause Venezuelans to drive fuel-inefficient vehicles. This boosts domestic consumption and reduces the amount of money from oil exports. Since Venezuela gets 94% of its export earnings from oil (the rest of the economy being pathetic basically) it is extremely vulnerable to oil production drops and rising domestic consumption.

I'll count Venezuela's educational programs successful if the non-oil parts of the Venezuelan economy ever amount to anything.

Check it Out said at February 19, 2013 6:59 PM:

"Venezuela experienced a surge in per capita income in the 2005-2008 period due to high oil prices." So? Every country has a main economic activity: Costa Rica has bananas, Japan has electronics, Mexico has pot, Colombia has coke and Venezuela has oil

"However, Venezuela's per capita GDP peaked in 2008 and has some down a bit since then." Yeap, just like the U.S. and many other countries in Europe, because of the economic events of late 2008, trigger, by the way, by the U.S. big corporation.

"Crude oil production in Venezuela has dropped by about a quarter since 2001, according to data from the U.S. Department of Energy." Oh well, now I see where you're getting your data from: the government, which you think is a reliable source now. You who are against big government, consider it more reliable than a non-government agency for the news fed to the masses.

"The industry also suffers from a deteriorating refinery system and accidents, including an explosion that killed at least 41 people in August." Venezuela's main economic activity is producing and imporiting oil for decades, not refining. And as far as the explosion goes, Are you kidding? Venezuela's GDP is dropping because of that explosion? How many "accidents" are you talking about, by the way? Thank God they haven't been oil spills by Exxon or BP, I say.

"Now Venezuela imports U.S. gasoline, bringing in a record 196,000 barrels a day of petroleum products in September." Again, Venezuela's main economic activity is producing and imporiting oil for decades, not refining. And every county imports something and the amounts of imports always increase in countries whose populations are still increasing, ¿no?

"Also, artificially low domestic gasoline prices cause Venezuelans to drive fuel-inefficient vehicles." Well, considering the technology Venezuela has compared to the technology the U.S. has, they're doing a lot better than Americans who still drive also fuel-inefficient vehicles, when Electric, Solar and Hydrogen cars are already built and ready to be sold in the U.S., but nope, they just never seem to get here, do they? And it is the U.S. that should set and example if it wants to lead, isn't it?

"Since Venezuela gets 94% of its export earnings from oil (the rest of the economy being pathetic basically) it is extremely vulnerable to oil production drops and rising domestic consumption." It is. I'll grant you that; however I see no reason why Venezuela's oil production is going to drop significantly soon, unless of course the U.S. is introducing alternative energies soon, which I very much doubt.

"I'll count Venezuela's educational programs successful if the non-oil parts of the Venezuelan economy ever amount to anything."
Well, that surprises me coming from you, but then again one cannot continue believing that the sun can be covered with one finger. Regarding those non-oil parts of the Venezuelans, just watch them!

Sam said at February 20, 2013 1:28 AM:

"...even with higher tax rates big government will have no capacity to deliver on more liberal dreams..."
I'm not much of a Liberal but it would be helpful to note that the 16 trillion dollars given to banks might not be helpful.

Randall Parker said at February 20, 2013 9:16 PM:

Check it Out,

Japan, South Korea, and Taiwan developed into first world countries with living standards much higher than Venezuela and they did this without natural resources. How'd they do that? Lots and lots of brain work. Real accomplishments. Not just the luck of geology.

Venezuela's oil production is already dropping and has been in decline for years.

shiva1008 said at February 21, 2013 2:28 AM:

Venezuela is the most violent country in South America.

http://www.telegraph.co.uk/news/worldnews/southamerica/venezuela/9769897/Venezuela-murder-rate-soars.html

They had 19,336 murders in 2011, and 21,692 in 2012 - compared to 14,612 in the US in 2011.

http://www.disastercenter.com/crime/uscrime.htm

McNeil said at February 21, 2013 6:04 PM:

Well, France is a way liberal and left-winged society, and it is also very much a developed country. Some countries in Scandinavia have also developed and blossomed in big-government liberal administrations, like Sweden and Finland.

If Randall is comparing Venezuela with Japan, South Korea and Taiwan, -which have completely different histories and people- I can step in and talk about France and Scandinavia, just to be fair. I think Randall is affraid to compare Venezuela with the right-wing, neo-liberal shit holes in Latin America like Mexico who is -as we speak- fighting a civil war and is almost a failed state where the common citizen is affraid of drug cartels, organized crime and police. Or take right-wing shithole Colombia, who hasn't recovered from his fascist government and has lower living standards than Venezuela and citizen's rights are only for the rich.

He doesn't see Brazil and Argentina as great examples of liberal left-winged governments who have turned their situation for the better in only one or two administrations.

Randall Parker said at February 21, 2013 9:39 PM:

McNeil,

It is funny you should bring up Scandinavia since the Scandinavian financial troubles of the 1990s were because the left went too far and Scandinavia has recovered by swinging right.

The idea of lean Nordic government will come as a shock both to French leftists who dream of socialist Scandinavia and to American conservatives who fear that Barack Obama is bent on “Swedenisation”. They are out of date. In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden’s public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Since then the Nordics have changed course—mainly to the right. Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s.

But thanks for playing.

Brazil and Argentina have had a number of past left-wing governments that have brought on hyperinflation. What's helped Brazil: the booming global market for natural resources and agricultural products.

France is in deepening financial trouble. Its IQ advantage is being offset by its large public sector and strong unions. Obviously, it needs to swing right like the Scandinavians have.

Mexico: Well, it has lower per capita income than Brazil now, but still higher than most other Latin American countries. Brazil has serious crime problems such as kidnappings and carjackings. Lots of people get carjacked and killed. Both Brazil and Mexico have murder rates that are over 4 times that of the United States. Within the United States you have to break out murder rates by race to understand what is going on. The same for Brazil. The crime rates are probably much lower in the heavily Italian/German areas.

In the US the huge differences in unsolved murder rates speak to the importance of high social capital and high quality people in a high trust society.

Randall Parker said at February 21, 2013 9:43 PM:

Oh, and Venezuela has over twice the murder rate of Brazil or Mexico.

Try researching before posting. Instead of channeling the Left's conventional wisdom go bathe your mind in the evidence. I've already done it. So when I go searching I already know I'll find that the relative murder rates are as I posted above. Ditto for per capita incomes. Throw in some data on average national IQs and some more demographic data and it all makes a great deal of sense.

Check it Out said at February 25, 2013 5:08 PM:

"Oh, and Venezuela has over twice the murder rate of Brazil or Mexico." Oh yes, and Haiti has higer living standards than Norway, right?

Well of course not. Your sentence quoted above is simply a lie; a puerile one. From 2006 to 2012 Mexico had a higher murder rate than Irak, 65,000 murders in Mexico during right-wing lousy Felipe Calderon's administration. This number is related ONLY to the drug-war related murders, and not including all those that resulted of muggings, burglaries, pedestrians run over, sex-rape crimes, relative or friendship quarrels, etc., many of which are not even denounced to the authorities. So saying that Venezuela has more than twice (!) the murder rate of Brazil or Mexico says a lot about not only your culture, but also shows a complete lack of the most elementary deductive ability, specially when there's a civil war going on in Mexico. So you can still add a few more thousands to that figure.

Since you're talking about twice the murder rate of Brazil or Mexico, please, just tell me that in 6 years there were over 120,000 (a hundred and twenty thousand) people murdered in Venezuela.

I don't know what sources you get your "information" from, so you really need to upgrade.


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