I want to challenge supporters of intervention and big government. Here are two simple questions. I’ll be happy if I can get a semi-reasonable answer to either of them.
1. Can you name a nation that became rich with statist policies?
Before you say Sweden, or even France, note that I asked you to name a nation that became rich during a period when it followed policies of interventionism and big government. Countries in Western Europe became rich during the 1800s and early 1900s when government was very small. Indeed, government spending consumed only about 10 percent of economic output in Western Europe prior to World War I and there was almost no redistribution. That’s more libertarian than what you find today in places such as Hong Kong and Singapore.
Speaking of which, what I’m really asking my leftist friends is that they give me the left-wing versions of Hong Kong and Singapore. These jurisdictions were relatively impoverished at the end of World War II, but they are now both very rich by global standards. And libertarians and other advocates of small government and free markets can make a very strong case that good policy played a role in their amazing rise to prosperity.
So where’s the role model for statists? What nation can they put forth as a successful example?
I won’t hold my breath waiting for an accurate answer.
Now for the other part of the challenge.
2. Can you name a nation that with interventionism and big government that is out-performing a similar nation with free markets and small government?
Before you embarrass yourself by asserting that, say, Denmark is richer than Paraguay because of statism, you need to look at the data. Denmark has a bigger welfare state than Paraguay, but it’s much more pro-market in other respects. Indeed, it is ranked #14 in the Economic Freedom of the World, compared to #89 for Paraguay. You’d be more clever to ask why, for example, #42 Belgium is richer than #6 Mauritius.
But this is why I asked for a comparison of similar nations. In other words, find two countries that are, or were, roughly equal in terms of demographics, economic development, resource endowments, and other factors. And then I want an example of a nation with statist policy that has out-performed a nation that instead chose small government and free markets. Or the jurisdictions don’t even need to be that similar. Just show me a statist nation that grows faster, over a meaningful period of time, than a pro-market jurisdiction.
From a libertarian perspective, I can cite lots of examples, such as Chile vs. Argentina vs. Venezuela. Or North Korea vs. South Korea. Or Ukraine vs. Poland. Or Hong Kong vs. Argentina. Or Singapore vs. Jamaica. Or the United States vs. Hong Kong and Singapore. Or even Sweden vs. Greece. I could continue, but I think you get the point.
I will patiently wait for my left-wing friends to provide examples that support their perspective, but cobwebs will form before they fulfill my challenge.
In the meantime, here’s a video that explains the simple recipe that countries should follow if they want to enjoy growth and prosperity.
You’ll notice that the video heavily borrows from Economic Freedom of the World.
That’s no surprise. There’s no better source for making apples-to-apples comparisons to see whether countries are following good policy.
The bad news is that the United States has taken a dive in the wrong direction in these rankings.
When Bill Clinton left office, the United States had the world’s 3rd-freest economy. Today, thanks to years of statism under both Bush and Obama, we’ve dropped to #17.
America is copying the nations that are in deep trouble because of excessive government.
But maybe some leftist can answer one or both of the questions above and we can stop worrying about the ever-expanding welfare state.