Breaking out of our Soviet economy…
I was a guest of NIGAG on Friday evening at their Christmas soirée. Guest of honour however was Owen Paterson, Tory shadow Secretary of State. There was, let’s say, a robust exchange of views. Patterson’s response to complaints that Northern Ireland had missed out on several public sector initiatives was to contrast the situation north of the border. He noted that “34% of GDP accounts for by public sector in the Republic against 71% in Northern Ireland. That’s at Soviet levels. Whilst in the south it makes sense for anyone with ambition and intelligence to start their own business, in Northern Ireland it makes much more sense for the most intelligent to go into the public sector or leave.” He reckoned that if the transformation of the Republic was anything to go by, it would probably take about twenty years to effect an economic transformation. Probably not far removed from the kind of message Gordon Brown sent the First and Deputy First Minister at the start of term. Grow an economy first, then you can have your money. Until then, not a penny more!
Willow, excluding the black market, the USSR didn’t have a private sector prior to Gorbachev’s economic and social reforms beginning in 1988 (which China began a decade earlier), so it is just meant as a jibe rather than a statistical comparative.
Joey, nonsense. Bank of Ireland’s annual Wealth of the Nation report put the number of millionaires in Ireland at 33,000. That is more millionaires per capita than anywhere else in the world. And before you carp on about it all being the price of a house: the principal private residence is excluded from the wealth calculation. Add that in and the number of millionaires would boom to insane proportions. Of that 33,000, 3,000 have a net worth of €5 million and €30 million; 330 have a net worth of over €30 million, and the other 31,670 have a net worth of between €1 million and €5 million.
The report also states Ireland’s household balance sheet is in “very good health” with assets outstripping liabilities by a multiple of six. Clearly, Ireland is cash and asset rich, and is not credit fuelled. In fact, the report goes on to state personal outdoes other OECD countries with percentage of income saved being 14 times higher than the US and 3 times higher than the UK. Only Germany even comes close to Irish savers where their citizens save 10% of income (compared to 14% for Irish citizens, equating to €10 billion at the end of 2006.
Typo: “…goes on to state that personal savings outdoes…”
Oh, and for the record, Nazi Germany failed and the Allies succeeded because the latter went on a total war economy immediately and the former did not, at least not until 1943/44, iirc.
Likewise, to conflate the American and British emergency measures with those that were de rigeur in the USSR is misleading at best. For example, it was the free market that built the industrial base in the United States that won the war, not any “emergency measures.”
Furthermore, the Soviet Union “made do” not on innovation but on the philosophy of “more is better.” Even the T-34, while a superior tank to the Panzer III and IV models on the Eastern Front, was not so much an innovation as the application proven technologies on a mechanically simple platform. The Russians won primarily on being willing to spend lives beyond what Germany could afford, aided and abetted by a complete lack of strategic vision on the part of the OKW and the little Austrian corporal, along with the American transfer of the jeeps, trucks, aviation gas and radios that enabled the Soviet war machine to operate during the perilous period between 1941 and 1944 — even after the victory at Kursk, the Soviets contemplated a seperate peace with the Germans.
On the other hand, if you want to see “innovation,” the best places to look would be the German equipment and tactics — some brilliant designs incorporating new technologies (along with a few very strange concepts so far beyond their time they’re only now being toyed with), ranging from jet fighters to infra scopes and guided missiles in the final years, a tactical doctrine head and shoulders above anything the Allies had in hand at the start of the war, having cashiered or exiled their visionaries — Zukhov to Siberia, for example — rather than embracing change. Even those crucial technologies, such as the RAF radar system, were installed as “scientific installations” so as to pass through a pacifistic Parliment.
The Dubliner
Thanks
Willowfield:
Ever heard of Sputnik?
Yes, a technological leap it was, albeit one ultimately intended to push the envelope for weapons delivery systems.
Dread:
Much as a zoo animal would have difficulty in the wilds, yes. The United States subsidized European economies (and still does), allowing them to experiment with soft socialism.
I’d love to know how the USA subsidized Europe (and Canada too, if some people are to be believed) while still remaining the largest economy by far in the world. What subsidies do we get and how are they paid ?
Oddly enough, when the US makes a cost cutting move, such as withdrawing divisions from Germany, suddenly the presence of our troops, usually the target of popular discontent, become some sort of socialist jobs program, with the chants of “Yankee go home†being replaced “but what about our jobs?â€
It’s hardly my business if you decide you have a need to put soldiers in various places around the world. I don’t hear much of the “but what about our jobs” talk, but if it does happen then it’s definitely ridiculous.
If a couple of thousand troops here and there is supposed to be a subsidy, I’d have to say that you were joking. You’re paying for the use of land and services here.
America has the best health system
By several metrics, it emphatically does not.
—latest technologies, newest drugs, excess capacity for disenchanted Canadians and Europeans, etc.
It’s hardly my problem if the way you organize your economy leads to your own citizens subsidizing everyone else. Don’t bitch at the rest of us about it, fix it.
They carry the freight for these things—the research for new drugs and the development of new procedures. These things cost. I suppose were we to withdraw our troops in Europe, the money supporting those bases could be re-tasked—but, as the German locals wheezed, what about their jobs?
I do not care about whether American troops are here or not, as long as they are well behaved (which apparently they usually are).
As for the rest, there are accomodations made for the poor in the United States—where else in the world can one own a car, a color TV, etc., and still be “poor?â€â€”but the breadth of society is expected to provide from themselves.
Not a particularly good measure. If I sold a standard portable colour TV, it would maybe pay for two weeks’ grocery shopping here, and probably something similar in the USA.
There are people who cannot provide for themselves.
Europe’s main problem is that they have tried to make the free market wilds into a petting zoo—try firing someone in France or Germany, for example.
It’s really sad when you’re defining the greatness of your country by illustrating how easy it is to fire people. That said, all that nasty socialism has been tried in the USA, and very effectively too where it worked. Try privatizing the TVA, and tell me about it. And in Europe, as far as I know we don’t have any direct equivalent of Fannie Mae and Freddie Mac.
I’ll tell you the difference between these “socialist” states and the USA. At the end of the day you’ll likely find that there are not significant differences in the overall tax take as a percentage of GDP. The difference is purely about how it’s spent. In the case of the USA, this is on the military, to the sum of$1 trillion per year (source. The fact that this massive tax and spend exists proves that business and economy in the USA isn’t hurt by taxation. A small fraction of this money could be used to establish a national and affordable health insurance scheme, for example. So what gives ?
Comrade Stalin: “I’d love to know how the USA subsidized Europe (and Canada too, if some people are to be believed) while still remaining the largest economy by far in the world. What subsidies do we get and how are they paid ? ”
What percentage of GDP would Western Europe have to expend to have the equivalent of the NATO (i.e. US) military guarantee? Most estimates I’ve seen run 2 to 4% of GDP. Beyond the UK, Western Europe is a military paper tiger, with a theoretical 2 million men under arms, but strained to project 40,000 overseas. Even that requires US military logistical support.
So, where do you think another, oh, 3% of GDP could be come up with to fund and create a functioning military?
Comrade Stalin: “It’s hardly my problem if the way you organize your economy leads to your own citizens subsidizing everyone else. Don’t bitch at the rest of us about it, fix it. ”
Ah, but it is not how we’ve organized the economy — the US isn’t in the business of organizing the economy. Likewise, I’m not bitching, I am making an observation. This is simply how it works at present — what chance would, say, Bangladesh or most of sub-Saharan Africa have under a wholly free market system?
Comrade Stalin: “Not a particularly good measure. If I sold a standard portable colour TV, it would maybe pay for two weeks’ grocery shopping here, and probably something similar in the USA.”
I agree. But, apparently, there are those who seem to think that the measure of poverty is income, not accumulated assets. Under the current tax regieme, there are those whose income is subsidized via a “negative tax” called the “Earned Income Tax Credit.” To remain eligible for other programs (such as Medicaid), rather than use this money wisely or to clear past debts, this money is quickly spent, so as to remain below certain thresholds. As I have said elsewhere, the misplacement of economic incentives.
Comrade Stalin: “It’s really sad when you’re defining the greatness of your country by illustrating how easy it is to fire people. That said, all that nasty socialism has been tried in the USA, and very effectively too where it worked. Try privatizing the TVA, and tell me about it. And in Europe, as far as I know we don’t have any direct equivalent of Fannie Mae and Freddie Mac. ”
Clear your blinkers, Josef.
The employment laws in Europe have created high unemployment in France and Germany. As a result, there is low productivity, with companies unable to eliminate those individuals who are on the employment roles without actually doing any work.
And do not confuse the government providing a public good with “socialism.” There is a place for public goods, especially in those marginal spaces where a private provider would be reluctant to provide services. As for Freddie, he’s as much, if not more, of a business as anything else, publicly traded on the NYSE. As for Fannie Mae, between the inefficiency and the accounting scadal, I would say that they’ve managed to grasp the worst ends of both the public and private entity.
Comrade Stalin: A small fraction of this money could be used to establish a national and affordable health insurance scheme, for example. So what gives ?
Oh, I can think of a few things. I wouldn’t want my medical care brought to me with the same beside manner as the IRS or efficiency of the US Postal service. Likewise, given the US gov’t's track record of creating common sense programs that suddenly balloon to cover those who have not paid into the system, I really am not comfortable with simply handing over 12% of the economy to the gov’t. Lastly, given the current crop of potatos running for executive power, none has suggested cutting the military (or anything else for that manner…) in order to pay for “a national and affordable health insurance scheme,” instead proposing new levels of taxation.
Dread,
I think you also need to remove the anti-European blinkers – at least partially.
Germany outstripped the US in productivity growth in 2006 and just in case you failed to notice actually has a trade surplus with China.
Also, if you factor out the population increases, European economic growth has matched American growth in the last 15 years. That while Germany was rebuilding one third of its country from scratch and taking in half a million Bosnian refugees too.
German society is still relatively cohesive, has low crime, provides superb health care to all and doesn’t need to imprison huge numbers of people to maintain its system.
The USA has 738 prisoners per 100,000 for a total of over 2 million prisoners while Germany has 95 per 100,000 for a total of just 78,000.
In my view, having to do things like deny tens of millions of your citizens access to health care while also imprisoning nearly eight times as many people per capita as somewhere like Germany is not a price worth paying so that I can live free or die.
George: “In my view, having to do things like deny tens of millions of your citizens access to health care while also imprisoning nearly eight times as many people per capita as somewhere like Germany is not a price worth paying so that I can live free or die. ”
First of all, no one is denied access to health care, George. By law, no facility that receives federal money (meaning just about all of them) is permitted, by law, to turn away a patient on the basis of ability to pay. Period. Not even illegal aliens or left-handed vegisexuals.
Secondly, as at least some of your data is qualified, i.e. cherry-picked and twisted to make it fit an argument, rather than stand on its own merits, some of what you bring to the table is less than persuasive. But let us get down to cases, shall we?
George: “Germany outstripped the US in productivity growth in 2006 and just in case you failed to notice actually has a trade surplus with China. ”
Ooooh, one year… bravo, were it the truth.
German economic growth = 2.8% (2006 est.)
US economic growth = 2.9% (2006 est.)
German industrial growth = 4.4%
US industrial growth = 4.2%
German unemployment = ~7.1%
US unemployment = ~4.8%
So, where is this “outstripping,” George?
George: “Also, if you factor out the population increases, European economic growth has matched American growth in the last 15 years.”
In other words, if you selectively ignore reality (and the shrinking German population (8.2 births per 1000 vs 10.71 deaths per 1000 (2007 estimates), you can make an argument.
George: “German society is still relatively cohesive, has low crime, provides superb health care to all and doesn’t need to imprison huge numbers of people to maintain its system. ”
America is more diverse, is expected to accept all comers, even by European nations who balk at doing the same. We are a younger nation in most sense of the term, including historically and demographically.
Prisoners are not imprisoned to “maintain the system,” but as a consequence of the prisoner’s criminal activity. Some of this crime arises from the greater diverisity (unless there has been a sea change, crime rates are highest in the areas of greatest population density, with racial / ethnic diversity being a related and moderately correlated factor((Vermont and Wyoming safe, NYC not so much…). Much of the surge is the inevitable “second shoe” to the crack epidemic of the Eighties — less tolerance for drugs and related drug crimes, harsher penalties for rock vs powder cocaine, etc. Their imprisonment, ergo, does nothing to maintain the system, but is a result of bad law arising from lax laws and a period of economic displacement, following the Johnson / Nixon / Ford / Carter economic mismanagement — the “War of Poverty,” price controls and Jimmy’s misery index (the sum of high interest rates, high unemployment and high inflation) all contributing to a rise in crime.
I can cherry-pick stats as well, Georgie.
Last I checked, Germany edges out Arkansas in terms of per capita GDP and is well behind Connecticut. Not exactly a world beater, there.
But, then, poverty is a relative thing — half the American “poor” own their homes (although this is subject to change — the mortgage mess is highly overblown, but still an issue), with three quarters having cars and air-conditioning, as opposed to, say, France… Heat-wave deaths in a first world nation? Shocking…
This next part is more for Josef than you, but to quote a Swedish think tank, Timbro, the problem with the EU is “The expansion of the public sector into overripe welfare states in large parts of Europe is and remains the best guess as to why our continent cannot measure up to our neighbor in the west,” the authors write. In 1999, average EU tax revenues were more than 40% of GDP, and in some countries above 50%, compared with less than 30% for most of the U.S”
I can’t imagine that this is changed much, given the aging population and welfare states, although Germany and France have potential under their current leadership. Likewise, for all the good talk that the EU gives about Kyoto and the environment, would you care to wager whether it is the US or the EU which has made better progress in cutting emissions? Hint, it is not the EU.
Lastly, don’t confuse anti-socialist and anti-statist with being anti-European, Georgie.
Keep up the good work, Dread Cthulhu. Josef will exit this thread with one less tooth than Shane McGowan.
Dread,
We were talking about state versus private sector in the economy and, without me noticing, the conversation strangely seems to have drifted to you mounting a dogged defence of the USA, despite me at no point making any kind of major criticism of the USA. My opinion is that the USA and Europe do a lot of things differently, often one is better than the other depending on how you look at it, but overall they come out around the same. I don’t care for this “my country is better than yours” bull.
What I don’t like is people insulting my intelligence. Take this claim, for example :
First of all, no one is denied access to health care, George. By law, no facility that receives federal money (meaning just about all of them) is permitted, by law, to turn away a patient on the basis of ability to pay. Period. Not even illegal aliens or left-handed vegisexuals.
I’m left with the impression that you think people here don’t know how it works in the USA. For a start, your claim is highly misleading – federal law in the USA requires emergency room access, not general access, although despite this I know that there are a lot of hospitals which will not turn sick people away. The first response to your comment is “why do people in the USA have health insurance if hospitals can’t turn people away” ? Clearly, emergency room access is not considered by the majority of US citizens to be the definition of sufficient healthcare. The US government does not think so either, which is why it funds Medicare and Medicaid.
Secondly, once you accept the principle of not turning sick people away even if they cannot afford treatment, you have already created “socialized medicine”. If someone is seriously injured in a car accident but has no insurance, and is treated and fixed up in the ER, who pays for it ? Either the hospital absorbs the cost (which is then reflected in the sums it bills paying users for care) or it gets written off (in which case the hospital’s shareholders, and the taxpayer, pay). All you need to do is take that arrangement, regularize it and bring in price controls, and hey presto, you’ve got the guts of a national healthcare system. That wasn’t too hard, was it ?
While we’re on about free markets and efficiency, look at the expenditure on healthcare in the USA. You pay more than double of the sum paid by most other European countries, yet the difference in terms of improvement in health is barely measurable. This is a pretty straightforward example of the free market insurance companies and health providers collaborating in a way that is reminiscent of a soviet operation. Costs are spiralling because there is no motivation to improve efficiency, and there are middlemen everywhere lining their pockets. You can’t possibly claim that this state of affairs is either effective or USA capitalism working at it’s best.
Next you go on to statistics. Despite the USA’s supposedly radically superior way of organizing it’s economy (and I say “organize” – laissez faire is still a government decision), your economic statistics are not markedly superior to those in Europe. Despite all the savings on tax, despite the higher employment (which one might reasonably expect would lead to higher productivity), productivity levels and growth are approximately the same. This is during a time period where Europe is integrating former Eastern bloc states into it’s economy and repairing the long-term damage done by Communism.
It’s ridiculous to say that size of the prison population to suggest that you’re somehow enforcing laws that we don’t enforce here, just as it is ridiculous to say that the ability to fire people at will makes the US economy strong (no evidence has been presented for this). The fact is that the USA has higher levels of criminality. I don’t know the reasons for that, but something doesn’t appear to be working properly.
Next, we have this gem :
But, then, poverty is a relative thing—half the American “poor†own their homes
Is this some sort of joke ? How can anyone possibly afford a home on minimum wage in the USA ? Unless your definition of “home” is a trailer or a mobile home. Over here, a “home” is a dwelling made out of bricks and cement that doesn’t blow away in a strong wind.
with three quarters having cars and air-conditioning,
But can they afford to run the aircon when they have to ? There’s nothing cheap about it.
as opposed to, say, France… Heat-wave deaths in a first world nation? Shocking…
Not as shocking as what was allowed to happen in New Orleans. Are we going to sit here all day and trade tit for tat national insults, or what ?
Comrade Stalin: “We were talking about state versus private sector in the economy and, without me noticing, the conversation strangely seems to have drifted to you mounting a dogged defence of the USA, despite me at no point making any kind of major criticism of the USA.”
Um, perhaps you weren’t paying attention, but I think it started somewhere between your rubbishing of the American medical system for not being another freebie and my suggestion that soft socialism in Europe grew out of the NATO security guarantee being used as cover for Europe to underspend on defense.
Comrade Stalin: “I’m left with the impression that you think people here don’t know how it works in the USA.”
And that impression is reinforced just about every time the subject comes up.
Comrade Stalin: “For a start, your claim is highly misleading – federal law in the USA requires emergency room access, not general access, although despite this I know that there are a lot of hospitals which will not turn sick people away.”
And as someone who actually works in healthcare finance, I know that it is your comment is not accurate, based both on my knowledge of the law, news stories that circulate through the office as a matter of professional interest (hint: hospitals caught “dumping” patients end up in deep kimshee) and the plain facts that I encounter in the course of my professional career, including an illegal alien comatose at one facility for the past five years, despite being entitled to only a year of Medicaid. Weighing what I know and what I see against your assertations, I find your presentation wanting.
Comrade Stalin: “The first response to your comment is “why do people in the USA have health insurance if hospitals can’t turn people away†?”
Health insurance as a common “perk” became widespread as a result of wage controls during World War II — companies could compete on wages, so they competed on other bases. Arguably, the growth of health insurance, with its regulations, is part of the problem. For instance, the Medicare program mandates that all facilities have a single, uniform pricing structure. However, Medicare also demands a contractual allowance — they will not pay the provider’s charges at full freight, but negotiate a lower reimbursement rate. This is common with private insurance, but, as these systems evolved, unintended consequences arose. Back to the original point, it was a trifle difficult to put the genie back in the bottle after the end of the war.
Comrade Stalin: “This is a pretty straightforward example of the free market insurance companies and health providers collaborating in a way that is reminiscent of a soviet operation.”
Actually, it is a result of the tinkering with the system. The feds decided they didn’t want a worse deal that the private companies, so they imposed regulations for a single price schedule, although the gov’t and private insurance have negotiated “contractual allowances” into their deals, meaning the only folks paying full freight are the folks paying cash who don’t qualify for other programs, public or private.
The Medicare system went from charges to a percentage of charges (resulting in a price hike) to an attempt to get to costs through a cost-to-charge ratio on the cost report (resulting in other number games) to a system based on a fixed reimbursment (with some supplements for outlier services).
Comrade Stalin: “Despite all the savings on tax, despite the higher employment (which one might reasonably expect would lead to higher productivity), productivity levels and growth are approximately the same.”
Actually, George went there, but why let fact get in the way of a good misrepresentation… AS for growth, the rates may be similar, but the base of that growth is not. The smaller the base, the easier it is to achieve higher percentage growth.
Comrade Stalin: “It’s ridiculous to say that size of the prison population to suggest that you’re somehow enforcing laws that we don’t enforce here,”
What you believe is immaterial, Josef. The fact is that much of the growth in the US prison population boils down to matters of law and policies relating to the enforcement of the law. They imprison a lot more recreational drug users here than in Europe, Josef, including non-violent end-consumers. I’d also wager that the “safe harbor” for “personal use” is lower here than there. Rolling from the Rockafeller drug laws in NY in the sixties to the Eighties “War of Crack,” and on into methamphetamine, aspects of the Puritan heritage have had their impacts to the system. Throw in knee-jerk “feel good” policies (three strikes and you’re out), and the law of unintended consequences comes into play. 70% of the growth fromt he late seventies to the mid-nineties were non-violent offenders.
http://webb.senate.gov/pdf/prisonstwopager.html
“Much of the growth in the prison population is due to changing policy, not increased crime. Many criminal justice experts have found that the increase in the incarceration rate is the product of changes in penal policy and practice, not changes in crime rates. Changes in sentencing, both in terms of time served and the range of offenses meriting incarceration, underlie the growth in the prison population.”
Comrade Stalin: “Is this some sort of joke ? How can anyone possibly afford a home on minimum wage in the USA ?”
Your preconceived notions are showing — few teens settle for the minimum wage, Josef, let alone grown-ups.
As for the rest… its drawn for US census data.
http://www.heritage.org/Research/Welfare/BG1713es.cfm
Comrade Stalin: “Not as shocking as what was allowed to happen in New Orleans. Are we going to sit here all day and trade tit for tat national insults, or what ?”
First of all, I consider my rebuttal of George seperate and distict from my conversation with you, save for the rebuttal of your assertion that the tax burdens in the US and the EU are nearly the same.
Secondly, nothing was “allowed to happen” to New Orleans — are you normally conspiracy minded, or is this a special occasion?
Thirdly…
Katrina flooding deaths (2005) = 2,541
French Heat Wave deaths (2003) = 14,802
That one pretty much speaks for itself.
Lastly, given George’s use of Germany as an example, were I to get insulting, I think I could have done far better than point out the failure of France’s system, neh?
the USSR didn’t have a private sector prior to Gorbachev’s economic and social reforms beginning in 1988
Depends what you mean by a private sector. The private plots held by farmers in kholkozy were responsible for 40% of Soviet agricultural production in the middle- to late-Soviet period, and over 20% even at the height of Stalinism.
I’d call that a fairly significant private sector even if, for ideological reasons, the official vocabulary of the USSR and its modern-day apologists wouldn’t.
Ever heard of Sputnik?
The Germans built Sputnik, the same way they ran the Apollo Programme.
“The people of the USSR may not have drunk fine wine and shopped at Harrods or Macy’s,”
no they did not but they spent $7 for every $1 earned by the USSR.
Since its inception in 1955, the Swedish system of handouts — to parents, retirees, the ill and the poor — has been based on trust: If you filed a claim, you were simply believed. But those days are over.
With fraud costing the state about 1 billion kronor, or $141 million, a year, the Social Insurance Administration began last year to set up the squad of investigators, which has since fanned out across the country to uncover welfare cheats.
The cost of Welfare is 400 billion (European Milliard) Kronor so the rate of fraud is taken to be 1 in 400.