Posts Tagged ‘Swedem’

I’ve already commented several times on the good and bad features of the Nordic Model, largely to correct the false narrative being advanced by Bernie Sanders (though I was writing on this issue well before the Vermont Senator decided to run for Chief Commissar President of the United States).

In any event, Sanders is a self-proclaimed socialist and he says he wants to adopt Scandinavian policies in the United States because he thinks this will boost the poor.

Yet he may want to check his premise. Warren Meyer of Coyote Blog looked at the numbers and concluded that poor people are not better off in Nordic countries.

When folks like Bernie Sanders say that we have more income inequality than Sweden or Denmark, this is certainly true. …Sanders implies that this greater income equality means the poor are better off in these countries, he is very probably wrong.  Because the data tends to show that while the middle class in the US is richer than the middle class in Denmark, and the rich in the US are richer than the rich in Denmark, the poor in the US are not poorer than those in Denmark. And isn’t this what we really care about?  The absolute well-being of the poor?

Regarding his rhetorical question, the answer may not be yes. As Margaret Thatcher famously observed, some statists resent the rich more than they care about the less fortunate.

But the motives of the left is not our focus today. Instead, we want to know whether the poor are worse off in the U.S. than in Nordic nations.

Meyer’s article seeks to measure living standards for different income classes in the United States and then compare them to living standards for different income classes in Denmark and Sweden.

Meyer found some data on this issue from the Economic Policy Institute, the same source that I cited in my 2007 study on the Nordic Model (see Figure 9 on page 11).

But he wanted to update and expand on that data. So he started digging.

I used data from the LIS Cross-National Data Center.  …the same data set used by several folks on the Left (John Cassidy and Kevin Drum) to highlight inequality issues…  I then compared the US to several other countries, looking at the absolute well-being of folks at different income percentile levels.  I have used both exchange rates and purchasing price parity (PPP) for the comparison.

And what did Meyer discover?

…all the way down to at least the 10th percentile poorest people, the poor in the US are as well or better off than the poor in Denmark and Sweden.  And everyone else, including those at the 20th and 25th percentile we would still likely call “poor”, are way better off in the US.

Here’s the data for Denmark.

As you can see, the poor in both nations have similar levels of income, but all other income classes in the United States are better off than their Danish counterparts.

And here’s the comparison of the United States and Sweden.

Once again, it’s very clear that America’s smaller overall burden of government generates  more prosperity.

So here’s the bottom line. If you’re a poor person in America, your income is as high as the incomes of your counterparts in Scandinavia.

But you have a much better chance of out-earning your foreign counterparts if you begin the climb the economic ladder. Yes, that means more “inequality,” but that’s why the term is meaningless. By the standards of any normal and rational person, the US system is producing better outcomes.

Now that we’ve ascertained that the United States is more prosperous than Nordic nations, let’s now say something nice about those countries by defending them against the scurrilous accusation that they follow socialist policies.

I’ve already shared my two cents on this issue, pointing out that neither Bernie Sanders nor Scandinavian nations properly can be considered socialist.

But if you don’t believe me, maybe you’ll believe the Prime Minister of Denmark, as reported by Vox.

Bernie Sanders…consistently references the social models of the Nordic states — and especially Denmark — as his idea of what democratic socialism is all about. But…Danish Prime Minister Lars Løkke Rasmussen said…he doesn’t think the socialist shoe fits. “I know that some people in the US associate the Nordic model with some sort of socialism,” he said, “therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”

The key statement from the Prime Minister is that Denmark is not a “planned economy,” because that is what you automatically get when the government is in charge of allocating resources and controlling the means of production.

But since that doesn’t happen in Denmark, Mr. Rasmussen is exactly right that his country isn’t socialist.

It’s high tax, and that’s not good. There’s a huge amount of dependency on government because of redistribution programs, and that’s also not good.

But a high-tax welfare state is not the same as socialism. Indeed, nations such as Denmark and Sweden would be somewhere in between France and the United States on my statism spectrum.

By the way, don’t let anyone get away with claiming that Scandinavian nations somehow prove that big government isn’t an obstacle to a country becoming rich.

Yes, Nordic countries are rich by world standards, but the key thing to understand is that they became prosperous in the late 1800s and early 1900s, back when government was very small.

It wasn’t until the 1960s that nations such as Denmark and Sweden adopted big welfare states. And, not coincidentally, that’s when economic growth slowed in those countries.

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Whenever there’s a discussion of the Nordic nations, I feel conflicted.

I don’t like the punitively high tax rates and socially destructive levels of redistribution in nations such as Denmark, but I also admire the very laissez-faire policies those countries have when it comes to regulation, trade, and property rights.

Indeed, on those latter issues, it’s worth noting that Nordic nations are more free market-oriented than the United States according to the experts at the Fraser Institute who put together Economic Freedom of the World.

Take the example of Sweden. That country has robust school choice and a partially privatized social security system.

Moreover, Nordic nations in general have lower business tax burdens and investment tax burdens than the United States. And Denmark and Sweden have both taken some modest steps to restrain government spending, so even in the realm of fiscal policy you can find some admirable developments.

But these countries need more than “modest steps” since the burden of government spending is still enormous. And excessive social-welfare expenditures are a major problem since such outlays depress labor force participation and encourage dependency.

I mention all these good and bad features of Nordic nations because Senator Bernie Sanders has suggested, as part of his presidential campaign, that the United States should become more like Sweden and Denmark.

If I got to pick and choose which policies we copied, I would agree.

But since Senator Sanders almost surely wants us to copy their fiscal policies (and presumably has no idea that those countries are pro-free market in other areas), I feel compelled to explain that he’s wrong.

And the good news is that other people are producing the evidence, which makes my job easy. Nima Sanandaji is a Swedish economist who just wrote a very illuminating article on this topic for the Cayman Financial Review.

He starts by noting how statists embrace the Nordic Model.

Denmark, Finland, Norway and Sweden have high-tax social democratic systems that for long have been admired by the left. …The high regard comes as no surprise. Nordic societies are uniquely successful. Not only are they characterised by high living standards, but also by other attractive features such as low crime rates, long life expectations, high degrees of social cohesion and relatively even income distributions. …This is often seen as proof that a ”third way” policy between socialism and capitalism works well, and that other societies can reach the same favourable social outcomes simply by expanding the size of government.

But Nima explains that Nordic nations became rich when they had free markets and small government.

The best that can be said about the Nordic welfare state is that the damage is somewhat contained because of cultural norms.

If one studies Nordic history and society in depth, however, it quickly becomes evident that the simplistic analysis is flawed. …High levels of trust, strong work ethic, civic participation, social cohesion, individual responsibility and family values are long-standing features of Nordic society that pre-date the welfare state. These deeper social institutions explain why Sweden, Denmark and Norway could so quickly grow from impoverished nations to wealthy ones as industrialisation and the market economy were introduced in the late 19th century. …The same norms explain why large welfare systems could be implemented in the mid-20th century. Strong work ethics and high levels of trust made it possible to levy high taxes and offer generous benefits with limited risk of abuse and undesirable incentive effects. It is important to stress that the direction of causality seems to be from cultures with strong social capital towards welfare states that have not had serious adverse consequences, and not the other way around.

Dr. Sanandaji then hypothesizes that we can learn a lot by comparing Americans of Nordic descent with those that didn’t emigrate.

…the Nordic success culture is maintained when people from this region move abroad. …The American descendants of Nordic migrants live in a very different policy environment compared with the residents of the Nordic countries. The former live in an environment with less welfare, lower taxes and (in general) freer markets. Interestingly, the social and economic success of Nordic-Americans is on a par with or even better than their cousins in the Nordic countries. …Close to 12 million Americans have Nordic (Scandinavian) origins.

And he produces some dramatic data.

Simply said, people of Nordic descent do very well in America, where the fiscal burden is lower than it is back in Scandinavia.

According to the 2010 US Census, the median household income in the United States is $51,914. This can be compared with a median household income of $61,920 for Danish Americans, $59,379 for Finish-Americans, $60,935 for Norwegian Americans and $61,549 for Swedish Americans. There is also a group identifying themselves simply as “Scandinavian Americans” in the US Census. The median household income for this group is even higher at $66,219.

But here’s the most remarkable information from his article. Nordic-Americans are far more productive than their cousins back home.

Danish Americans have a contribution to GDP per capita 37 per cent higher than Danes still living in Denmark; Swedish Americans contribute 39 per cent more to GDP per capita than Swedes living in Sweden; and Finnish Americans contribute 47 per cent more than Finns living in Finland. …there is prima facie evidence that the decedents of Nordic people who move to the U.S. are significantly better off than those who stay at home.

Here’s the infographic Nima sent with his article.

Wow, this is game, set, match, as far as I’m concerned.

Nima produced similar data a few years ago looking just as Swedes.

But this new data makes it clear that we’re not just looking at a one-nation phenomenon. The lesson is clear. Nordic people manage to be somewhat productive in high-tax, big-government nations.

But if they reside in a medium-tax country with a medium-sized government, they are highly productive (so just imagine what they could achieve in Hong Kong or Singapore!).

And Nima also points out that there is less poverty among Scandinavians in America than there is among Scandinavians in Scandinavia.

Nordic descendants in the U.S. today have half the poverty rate of the average of Americans – a consistent finding for decades. In other words, Nordic Americans have lower poverty rates than Nordic citizens.

So here’s the lesson that will be a nightmare for Bernie Sanders. It turns out that his role models actually teach us that big government makes people less prosperous.

…in the long run, the large welfare states have eroded incentives, and ultimately the social norms that bounded Nordic societies together. The U.S. system, with greater emphasis on personal responsibility, is more in line with the traditional Nordic system that allowed for the culture of success to develop in the first place. Thus, we should not be surprised that Nordic Americans have both higher living standard and lower poverty than their cousins in the Nordic welfare states.

To summarize, the recipe for prosperity is free markets (which you find in Scandinavia) and small government (which is absent in those countries).

But Senator Sanders wants to copy the bad parts of Nordic nations while ignoring the good parts. For those who care about real-world evidence, Dr. Sanandaji’s data suggests we should take the opposite approach.

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In my younger years, I oftentimes would have arguments with statists who wanted me to believe that countries in Northern Europe like Sweden “proved” that generous welfare states were compatible with economic prosperity.

That doesn’t happen as often today because the Nordic nations in recent decades have not enjoyed rapid growth. Moreover, some of the nations – such as Sweden in the early 1990s and Iceland last decade – suffered from serious financial downturns.

So I stand by my position that free markets and small government are the recipe for prosperity.

That being said, there are still some interesting lessons to be learned from these countries.

As I’ve previously argued, the Nordic countries demonstrate that a big welfare state is “affordable” so long as countries are willing to accept less growth and so long as they are willing to compensate for high taxes and high spending with very pro-market policies in other areas.

And that’s definitely the case. If you examine the Economic Freedom of the World data, you see that Nordic nations get fairly decent scores because they have very laissez-faire policies for regulation, trade, monetary policy, and property rights.

Yes, the fiscal burden of the welfare state slows growth and drags down their rankings, but they still do far better than other European countries that have big governments and a lot of intervention. Just think of France (#58), Italy (#79), and Spain (#51).

With this bit of background, let’s now look at two new and interesting articles about the extent to which the Nordic nations should be role models.

Our first story is from the Washington Post, and it’s authored by a British journalist who lives in Denmark. He starts by noting the inordinate amount of praise these countries receive.

The United States is in the midst of an episode of chronic Scandimania, brought on in part by the habitually high placing of Sweden and its similarly prosperous, egalitarian, collectivist neighbors — Denmark, Norway, Iceland and Finland — in global rankings of everything from happiness to lack of corruption.

But he then points out that these is trouble in the Nordic paradise.

The Washington Post is not immune to Scandinavia’s charms, recently marveling at how Danish branches of McDonald’s manage to pay their employees 2.5 times U.S. McDonald’s workers’ wages (clue: When about 75 percent of earnings disappear as income and consumption taxes, higher wages are more necessity than choice). …and last month the Times assured us that “A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia.” (*Cough* unemployment is 5.6 percent in the United States, vs. 8.1 percent in Sweden, 8.9 percent in Finland and 6.4 percent in Denmark.) …And global and domestic events are conspiring to make life a little more uncertain for these former high achievers. …the Scandinavian model’s structural fissures are coming under increasing stress. …the Norwegians seem to have lost their parsimonious, workaholic, Lutheran mojo. Norwegians treat Friday as a “free day” and take more sick leave than anyone else in Europe, if not the world — a law enshrines their right to claim sick days even while on holiday.

The author continues, pointing out some serious warts.

Sweden’s political establishment was subverting the democratic process. This has distracted from the slowing economy, increasing state and household debt levels, and one of the highest youth unemployment rates in Europe. …Denmark took a bigger hit than its neighbors following the 2008 global economic crisis, which increased pressure on its massive welfare state, funded by the highest taxes in the world. Household debt is the highest in Europe (any connection there, I wonder?). …along with the Norwegians they work among the fewest hours a year of any Europeans. …In Iceland, …ultra-Nordic social cohesion…led to the near-bankruptcy of the entire country.

And here are some more details that also don’t sound so encouraging.

These countries that do so well in life-satisfaction surveys also record the highest consumption of antidepressants in the world, and despite their reputation for gender equality, they have the highest rates of violence against women in Europe. …few Americans would truly embrace a Scandinavian-style society. The tax rates alone would likely be a sufficient deterrent. Though I’m a freelance journalist, I essentially work until Thursday lunchtime for the state. And it’s not as if the money that is left in my pocket goes all that far: These are fearfully expensive countries in which to live.

Here’s the bottom line from a balanced story.

Scandinavia is not the utopia that American liberals or the 11 million Americans of Nordic descent often make it out to be, just as it is not the quasi-commie, statist gulag that those on the right would often have us believe. …I’m not saying the Nordic miracle is over, but it was never a miracle. And it’s over.

Now let’s look at our second story, which was published by the New York Post.

The tone is more negative, but it basically has the same message.

In the American liberal compass, the needle is always pointing to places like Denmark. Everything they most fervently hope for here has already happened there.

But there’s bad news in the land of the Northern Lights.

Here’s what he writes about Denmark.

Visitors say Danes are joyless to be around. Denmark suffers from high rates of alcoholism. In its use of antidepressants it ranks fourth in the world. (Its fellow Nordics the Icelanders are in front by a wide margin.) Some 5 percent of Danish men have had sex with an animal. Denmark’s productivity is in decline, its workers put in only 28 hours a week, and everybody you meet seems to have a government job. …Danes operate on caveman principles — if you find it, share it, or be shunned. Once your date with Daisy the Sheep is over, you’d better make sure your friends get a turn.

Though Daisy is lucky that she’s not on the tax rolls. The tax system in that nation is so oppressive that I’ve joked birthers should accuse Obama of having been born in Denmark.

In addition to paying enormous taxes — the total bill is 58 percent to 72 percent of income — Danes have to pay more for just about everything. Books are a luxury item. Their equivalent of the George Washington Bridge costs $45 to cross. …Health care is free — which means you pay in time instead of money. Services are distributed only after endless stays in waiting rooms. (The author brought his son to an E.R. complaining of a foreign substance that had temporarily blinded him in one eye and was turned away, told he had to make an appointment.) Pharmacies are a state-run monopoly, which means getting an aspirin is like a trip to the DMV.

But the author doesn’t just pick on Denmark.

Iceland’s famous economic boom turned out to be one of history’s most notorious real estate bubbles. …The success of the Norwegians — the Beverly Hillbillies of Europe — can’t be imitated. Previously a peasant nation, the country now has more wealth than it can spend: Colossal offshore oil deposits spawned a sovereign wealth fund that pays for everything. Finland, which tops the charts in many surveys (they’re the least corrupt people on Earth, its per-capita income is the highest in Western Europe and Helsinki often tops polls of the best cities), is also a leader in categories like alcoholism, murder (highest rate in Western Europe), suicide and antidepressant usage. …Booze-related disease is the leading cause of death for Finnish men, and second for women. …“Dark” doesn’t just describe winter in the Arctic suburbs, it applies to the Finnish character.

Sweden gets a lot of attention.

Immigration is associated in the Swedish mind with welfare (housing projects full of people on the dole) and with high crime rates (these newcomers being more than four times as likely to commit murder). Islamist gangs control some of the housing projects. Friction between “ethnic Swedes” and the immigrants is growing. Welfare states work best among a homogeneous people, and the kind of diversity and mistrust we have between groups in America means we could never reach a broad consensus on Nordic levels of social spending. Anyway, Sweden thought better of liberal economics too: When its welfare state became unsustainable (something savvy Danes are just starting to say), it went on a privatization spree and cut government spending from 67 percent of GDP to less than half.

And then there’s this excerpt about the Swedes, which makes me think it might be better to cohabit with a sheep in Copenhagen.

…a poll in which Swedes were asked to describe themselves, the adjectives that led the pack were “envious, stiff, industrious, nature-loving, quiet, honest, dishonest and xenophobic.” In last place were these words: “masculine,” “sexy” and “artistic.”

And here’s his conclusion.

Scandinavia, as a wag in The Economist once put it, is a great place to be born — but only if you are average.  …That’s Scandinavia for you, folks: Bland, wholesome, individual-erasing mush. But, hey, at least we’re all united in being slowly digested by the system.

Indeed, the Nordic focus on equality is so pervasive that it leads to unbelievably stupid policies.

P.S. There are some really creepy examples of failed government-run health care in Sweden.

P.P.S. Though Sweden has wised up in many regards. After the crisis of the early 1990s, the country was a role model of spending restraint. Here’s a video on some of Sweden’s pro-market reforms in recent decades.

P.P.P.S. The single-most compelling piece of evidence about the superiority of the American system is that Swedes in America earn far more than Swedes in Sweden.

P.P.P.P.S. The second-most compelling piece of evidence about the limits of Nordic statism is that these nations became prosperous before big welfare state were imposed. I call this the paradox of Wagner’s Law.

P.P.P.P.P.S. Even Denmark is trying to cut back on the welfare state. Though that will be bad news for Lazy Robert.

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There’s an old saying that there’s no such thing as bad publicity.

That may be true if you’re in Hollywood and visibility is a key to long-run earnings.

But in the world of public policy, you don’t want to be a punching bag. And that describes my role in a book excerpt just published by Salon.

Jordan Ellenberg, a mathematics professor at the University of Wisconsin, has decided that I’m a “linear” thinker.

Here are some excerpts from the article, starting with his perception of my view on the appropriate size of government, presumably culled from this blog post.

Daniel J. Mitchell of the libertarian Cato Institute posted a blog entry with the provocative title: “Why Is Obama Trying to Make America More Like Sweden when Swedes Are Trying to Be Less Like Sweden?” Good question! When you put it that way, it does seem pretty perverse.  …Here’s what the world looks like to the Cato Institute… Don’t worry about exactly how we’re quantifying these things. The point is just this: according to the chart, the more Swedish you are, the worse off your country is. The Swedes, no fools, have figured this out and are launching their northwestward climb toward free-market prosperity.

I confess that he presents a clever and amusing caricature of my views.

My ideal world of small government and free markets would be a Libertopia, whereas total statism could be characterized as the Black Pit of Socialism.

But Ellenberg’s goal isn’t to merely describe my philosophical yearnings and policy positions. He wants to discredit my viewpoint.

So he suggests an alternative way of looking at the world.

Let me draw the same picture from the point of view of people whose economic views are closer to President Obama’s… This picture gives very different advice about how Swedish we should be. Where do we find peak prosperity? At a point more Swedish than America, but less Swedish than Sweden. If this picture is right, it makes perfect sense for Obama to beef up our welfare state while the Swedes trim theirs down.

He elaborates, emphasizing the importance of nonlinear thinking.

The difference between the two pictures is the difference between linearity and nonlinearity… The Cato curve is a line; the non-Cato curve, the one with the hump in the middle, is not. …thinking nonlinearly is crucial, because not all curves are lines. A moment of reflection will tell you that the real curves of economics look like the second picture, not the first. They’re nonlinear. Mitchell’s reasoning is an example of false linearity—he’s assuming, without coming right out and saying so, that the course of prosperity is described by the line segment in the first picture, in which case Sweden stripping down its social infrastructure means we should do the same. …you know the linear picture is wrong. Some principle more complicated than “More government bad, less government good” is in effect. …Nonlinear thinking means which way you should go depends on where you already are.

Ellenberg then points out, citing the Laffer Curve, that “the folks at Cato used to understand” the importance of nonlinear analysis.

The irony is that economic conservatives like the folks at Cato used to understand this better than anybody. That second picture I drew up there? …I am not the first person to draw it. It’s called the Laffer curve, and it’s played a central role in Republican economics for almost forty years… if the government vacuums up every cent of the wage you’re paid to show up and teach school, or sell hardware, or middle-manage, why bother doing it? Over on the right edge of the graph, people don’t work at all. Or, if they work, they do so in informal economic niches where the tax collector’s hand can’t reach. The government’s revenue is zero… the curve recording the relationship between tax rate and government revenue cannot be a straight line.

So what’s the bottom line? Am I a linear buffoon, as Ellenberg suggests?

Well, it’s possible I’m a buffoon in some regards, but it’s not correct to pigeonhole me as a simple-minded linear thinker. At least not if the debate is about the proper size of government.

I make this self-serving claim for the simple reason that I’m a big proponents of the Rahn Curve, which is …drum roll please… a nonlinear way of looking at the relationship between the size of government and economic performance. And just in case you think I’m prevaricating, here’s a depiction of the Rahn Curve that was excerpted from my video on that specific topic.

Moreover, if you click on Rahn Curve category of my blog, you’ll find about 20 posts on the topic. And if you type “Rahn Curve” in the search box, you’ll find about twice as many mentions.

So why didn’t Ellenberg notice any of this research?

Beats the heck out of me. Perhaps he made a linear assumption about a supposed lack of nonlinear thinking among libertarians.

In any event, here’s my video on the Rahn Curve so you can judge for yourself.

And if you want information on the topic, here’s a video from Canada and here’s a video from the United Kingdom.

P.S. I would argue that both the United States and Sweden are on the downward-sloping portion of the Rahn Curve, which is sort of what Ellenberg displays on his first graph. Had he been more thorough in his research, though, he would have discovered that I think growth is maximized when the public sector consumes about 10 percent of GDP.

P.P.S. Ellenberg’s second chart puts the U.S. and Sweden at the same level of prosperity. Indeed, it looks like Sweden is a bit higher. That’s certainly not what we see in the international data on living standards. Moreover, Ellenberg may want to apply some nonlinear thinking to the data showing that Swedes in America earn a lot more than Swedes still living in Sweden.

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While I mostly focus on bad government policy in the United States, I also think we can learn lessons from what’s happening in other nations.

In some cases, I share positive stories, such as the success of privatized Social Security in Australia, nationwide school choice in Sweden, and genuine spending cuts in the Baltic nations.

In most cases, though, I’m pointing out bad policy.

Some topics deserve special treatment, such as the ongoing horror story of government-run healthcare in the United Kingdom.

In other cases, though, I share one-off stories about government incompetence and stupidity.

*Such as taxpayer-financed friends for mass murderers in Norway.

*Financing a giant “Burger Boy” in the United Kingdom.

*Promoting welfare tourism in the European Union.

*Spending $30 to collect $1 of tax in Germany.

*Regulation of coffee enemas in Japan.

Today, we’re going to share more stories of feckless behavior by foreign politicians and bureaucrats.

From Canada, we learn that the government of Manitoba is micro-managing daycare lunches in such bizarre ways that a family was fined because “grains” weren’t included in their kids’ meals.

Kristin Barkiw of Rossburn, Manitoba, Canada brought two of her children home from Little Cub’s Den daycare when she saw that her kids were sent home with a note. …the message told the mom she had failed to provide a nutritionally balanced lunch for her children, 5-year-old Logan and 3-year-old Natalie.  Not only that, Kristin was fined $10, $5 per child, for missing grains in their lunch of leftover roast beef, carrots, potatoes, an orange and milk. Further, the note said that the daycare staff gave Logan and Natalie Ritz crackers to fulfill the nutritional requirement of grains, which some see as a less than nutritious option. The nutritional regulation for daycare lunches is actually law in the province. The Manitoba government’s Early Learning and Child Care lunch regulations state that daycare programs must ensure children are given a lunch with a meat, a grain, a milk product and two servings of fruit and vegetables and any missing food groups must be supplemented by the care provider.

Heaven forbid that parents actually be in charge of what their kids eat!

You won’t be surprised to learn that France is on the list. It appears the government’s rail system is staffed by numbskulls.

France’s SNCF rail company has ordered 2,000 trains for an expanded regional network that are too wide for many station platforms, entailing costly repairs, the national rail operator said on Tuesday. A spokesman for the RFF national rail operator confirmed the error, first reported by satirical weekly Canard Enchaine in its Wednesday edition. …Construction work has already begun to displace equipment and widen hundreds of train platforms to accommodate the new trains, but hundreds more remain to be fixed, he added. …The RFF only gave the dimensions of platforms built less than 30 years ago, but most of France’s 1,200 platforms were built more than 50 years ago. Repair work has already cost 80 million euros ($110 million).

I guess I’m not surprised by that story since the French once built an aircraft carrier with a flight deck that was too small.

In Sweden, a novelty tourist hotel made of ice will have to install fire alarms.

The Ice Hotel, which is rebuilt every year in northern Sweden out of enormous chunks of ice from the Torne River in Jukkasjärvi, Kiruna, will this year come equipped with fire alarms – and the irony isn’t lost on the staff. “We were a little surprised when we found out,” hotel spokeswoman Beatrice Karlsson told The Local. …While it might sound crazy that a building made of water needs to be equipped with fire alarms, the fact that the hotel is built from scratch every year means it needs to abide by the rules that apply to every new building, rules set by the National Housing Board (Boverket).

If I had to pick a prize from today’s list, this might win the prize. It’s a stunning display of government in action. Though probably not as bad as the time it took a local government in the U.S. two days to notice a dead body in a community swimming pool.

And from Germany, we have a story about massive cost overruns incurred by a pan-European bureaucracy that supposedly helps encourage fiscal discipline.

“Do as we say, not as we do”

It was meant to cost £420m of European taxpayers’ money but the bill for the new headquarters of the European Central Bank (ECB) has more than doubled to £960m and could rise even further. The bank is the key enforcer of austerity measures in the troubled eurozone nations, but appears to be having trouble keeping its own finances in order. The 45-storey glass and steel building, made up of two joined towers, will be more than 600ft tall when it is finished. But it has already been under construction for a decade and is three years behind schedule.

Of course, it goes without saying that cost overruns and delays are par for the course with government.

Just in case anyone thinks I’m picking on foreigners, here’s a story that makes me ashamed to be American. Or, to be more precise, it makes me ashamed that we have some of the world’s most pathetic bureaucrats.

Honors Night at Cole Middle School is no more. Parents got an email from Principal Alexis Meyer over the weekend saying some members of the school community “have long expressed concerns related to the exclusive nature of Honors Night.” The email goes on to say students will be recognized in other ways. …Parents and students are not happy with the change. “How else are they suppose to learn coping skills, not just based on success, but relative failure, it might not be failure, but understand what it takes to achieve high levels,” said parent Joe Kosloski. …“That made me wanna work harder and a lot of other people work harder, so just the fact you can’t work towards it anymore then there is no goal,” said 8th grade student Kaitlyn Kosloski. Changes are also being made to the middle school’s sports awards.

You read correctly. They also won’t recognize athletic success.

I guess everyone gets a participation medal.

Except, of course, we still single out kids who commit horrible crimes in school. Such as having toy army men, eating a pop tart the wrong way, building a motion detector for a school science experiment, or countless other “offenses” that trigger anti-gun lunacy by brainless bureaucrats.

The moral of these stories, both from America and around the world, it that government is not the answer. Unless, of course, you’ve asked a really strange question.

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When I first started working on fiscal policy in the 1980s, I never thought I would consider Sweden any sort of role model.

It was the quintessential cradle-to-grave welfare state, much loved on the left as an example for America to follow.

But Sweden suffered a severe economic shock in the early 1990s and policy makers were forced to rethink big government.

They’ve since implemented some positive reforms in the area of fiscal policy, along with other changes to liberalize the economy.

I even, much to my surprise, wrote a column in 2012 stating that it’s “Time to Follow Sweden’s Lead on Fiscal Policy.”

More specifically, I’m impressed that Swedish leaders have imposed some genuine fiscal restraint.

Here’s a chart, based on IMF data, showing that the country enjoyed a nine-year period where the burden of government spending grew by an average of 1.9 percent per year.

Swedish Fiscal Restraint

From a libertarian perspective, that’s obviously not very impressive, particularly since the public sector was consuming about two-thirds of economic output at the start of the period.

But by the standards of European politicians, 1.9 percent annual growth was relatively frugal.

And since Mitchell’s Golden Rule merely requires that government grow slower than the private sector, Sweden did make progress.

Real progress.

It turns out that a little bit of spending discipline can pay big dividends if it can be sustained for a few years.

This second chart shows that the overall burden of the public sector (left axis) fell dramatically, dropping from more than 67 percent of GDP to 52 percent of economic output.

Swedish Spending+Deficit as % of GDP

By the way, the biggest amount of progress occurred between 1994 and 1998, when spending grew by just 0.27 percent per year. That’s almost as good as what Germany achieved over a four-year period last decade.

It’s also worth noting that Sweden hasn’t fallen off the wagon. Spending has been growing a bit faster in recent years, but not as fast as overall economic output. So the burden of spending is now down to about 48 percent of GDP.

And for those who mistakenly focus on the symptom of red ink rather than the underlying disease of too much spending, you’ll be happy to know that spending discipline in the 1990s turned a big budget deficit (right axis) into a budget surplus.

Now let’s get the other side of the story. While Sweden has moved in the right direction, it’s still far from a libertarian paradise. The government still consumes nearly half of the country’s economic output and tax rates on entrepreneurs and investors max out at more than 50 percent.

And like the United Kingdom, which is the source of many horror stories, there are some really creepy examples of failed government-run health care in Sweden.

Though I suppose if the third man grew new legs, maybe we would all reassess our views of the Swedish system. And if the first guy managed to grow a new…oh, never mind.

But here are the two most compelling pieces of evidence about unresolved flaws in the Swedish system.

First, the system is so geared toward “equality” that a cook at one Swedish school was told to reduce the quality of the food she prepared because other schools had less capable cooks.

Second, if you’re still undecided about whether Sweden’s large-size welfare state is preferable to America’s medium-size welfare state, just keep in mind that Americans of Swedish descent earn 53 percent more than native Swedes.

In other words, Sweden might be a role model on the direction of change, but not on the level of government.

P.S. On a separate topic, regular readers know that I’m a fan of lower taxes and a supporter of the Second Amendment. So you would think I’d be delighted if politicians wanted to lower the tax burden on firearms.

This is not a hypothetical issue. Here’s a passage from a local news report in Alabama about a state lawmaker who wants a special sales tax holiday for guns and ammo.

Rep. Becky Nordgren of Gadsden said today that she has filed legislation to create an annual state sales tax holiday for gun and ammunition purchases. The firearms tax holiday would occur every weekend prior to the Fourth of July. Alabama currently has tax holidays for back-to-school shopping and severe weather preparedness. Nordgren says the gun and ammunition tax holiday would be a fitting way to celebrate the anniversary of the nation’s birth and Alabama’s status as a gun friendly state.

I definitely admire the intent, but I’m enough of a tax policy wonk that the proposal makes me uncomfortable.

Simply stated, I don’t want the government to play favorites.

For instance, I want to replace the IRS in Washington with a simple and fair flat tax in part because I don’t want the government to discriminate based on the source of income, the use of income, or the level of income.

And I want states to have the lowest-possible rate for the sales tax, but with all goods and services treated equally. Alabama definitely fails on the first criteria, and I wouldn’t be surprised if it also granted a lot of loopholes.

So put me in the “sympathetic skepticism” category on this proposal.

Though I imagine this Alabama lass could convince me to change my mind.

P.P.S. A few days ago, the PotL noticed that I shared some American-European humor at the end of a blog post. She suggests this would be a good addition to that collection.

Europe Heaven Hell

I can’t comment on some of the categories, but I will say that McDonald’s in London is just as good as McDonald’s in Paris, Milan, Geneva, and Berlin.

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Are there any fact checkers at the New York Times?

Since they’ve allowed some glaring mistakes by Paul Krugman (see here and here), I guess the answer is no.

But some mistakes are worse than others.

Consider a recent column by David Stuckler of Oxford and Sanjay Basu of Stanford. Entitled “How Austerity Kills,” it argues that budget cuts are causing needless deaths.

Here’s an excerpt that caught my eye.

Countries that slashed health and social protection budgets, like Greece, Italy and Spain, have seen starkly worse health outcomes than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted for stimulus over austerity.

The reason this grabbed my attention is that it was only 10 days ago that I posted some data from Professor Gurdgiev in Ireland showing that Sweden and Germany were among the tiny group of European nations that actually had reduced the burden of government spending.

Greece, Italy, and Spain, by contrast, are among those that increased the size of the public sector. So the argument presented in the New York Times is completely wrong. Indeed, it’s 100 percent wrong because Iceland (which Professor Gurdgiev didn’t measure since it’s not in the European Union) also has smaller government today than it did in the pre-crisis period.

But that’s just part of the problem with the Stuckler-Basu column. They want us to believe that “slashed” budgets and inadequate spending have caused “worse health outcomes” in nations such as Greece, Italy, and Spain, particularly when compared to Germany, Iceland, and Spain.

But if government spending is the key to good health, how do they explain away this OECD data, which shows that government is actually bigger in the three supposed “austerity” nations than it is in the three so-called “stimulus” countries.

NYT Austerity-Stimulus

Once again, Stuckler and Basu got caught with their pants down, making an argument that is contrary to easily retrievable facts.

But I guess this is business-as-usual at the New York Times. After all, this is the newspaper that’s been caught over and over again engaging in sloppy and/or inaccurate journalism.

Oh, and if you want to know why the Stuckler-Basu column is wrong about whether smaller government causes higher death rates, just click here.

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