Conservative Logic

An economic guide to politics, designed for post-Baby Boomers

Lightning Round II

Posted by A Hamilton on June 30, 2008

Smaller Government Delivers Better Results

This has, of course, been discussed before on this blog. But this article hits hard on the issue. In it, the author, Keith Marsden, summarizes the results of his landmark study comparing twenty similar nations — 10 low tax, small government states and 10 higher tax large government states over the past two decades. The conclusions are fascinating. Not only has economic performance been superior in small government states, but also:

“Slimmer-government countries also delivered more rapid social progress in some areas. They have, on average, higher annual employment growth rates (1.7% compared to 0.9% from 1995-2005). Their youth unemployment rates have been lower for both males and females since 2000. The discretionary income of households rose faster in the first group. This allowed their real consumption to increase by 4.1% annually from 2000-2005, up from 2.8% in 1990-2000. In the bigger-government group, the growth of household consumption has slowed to a 1.3% average annual rate, from 2.1% during the 1990-2000 period.

Faster economic growth in the first group also generated a more rapid increase in government revenue, despite (or rather, because of, supply-siders suggest) lower overall tax burdens.

Slimmer-government countries seem to have made better use of their smaller health resources. Total spending on health programs reached 9.5% of GDP in the bigger government group in 2004, 1.6 percentage points above the average in the slimmer-government group. Yet slimmer-government countries have raised their average life expectancy at birth at a faster pacer since 1990, reaching an average level of 78 years in 2005, just one year below the average for bigger spenders. Average life expectancy is now 80 years in Singapore, although government and private health programs combined cost only 3.7% of its GDP.

Finally, spending by bigger governments on social benefits (such as unemployment and disability benefits, housing allowances and state pensions) was higher (20.3% of GDP in 2006) than that of slimmer governments (9.6%). But these transfers do not appear to have resulted in greater equality in the distribution of income. The Gini index measuring income distribution is similar for both groups.”

More confirmation for a primary thesis of this blog – that the best way to address social issues is to grow the economic pie, not to increase taxes and burn money on social programs that have a poor track record of efficient results.

The Real Story Behind Iraq

Here is a very good summary history of the drivers behind the invasion of Iraq. The conventional wisdom, of course, is that the Bush Administration dragged the country into the war. This article reveals a more complex truth, including some interesting commentary from certain individuals along the way who now behave as if they opposed the war from the beginning:

“Saddam Hussein must not be allowed to threaten his neighbors or the world with nuclear arms, poison gas, or biological weapons. . . . Other countries possess weapons of mass destruction and ballistic missiles. With Saddam, there is one big difference: he has used them. Not once, but repeatedly. . . . I have no doubt today that, left unchecked, Saddam Hussein will use these terrible weapons again.” – Bill Clinton

Bill Clinton of course also was the first to refer to Iraq as a member of an “unholy axis” of rogue nations…. Years before Bush issued his much ridiculed “axis of evil” characterization.

What did Al Gore think?

“You allow someone like Saddam Hussein to get nuclear weapons, ballistic missiles, chemical weapons, biological weapons. How many people is he going to kill with such weapons? . . . We are not going to allow him to succeed.” – Al Gore

Or how about this gem from Hillary Clinton:

“Every nation has to be either for us, or against us. Those who harbor terrorists, or who finance them, are going to pay a price.” — Hillary Clinton

Again, despite the fact that Bush has been widely derided by the left for his supposedly simplistic absolutism, it looks like he was in pretty good company at the time.

WMDs, terrorist connections, international consensus…. This article does a good job assessing the political reality behind Iraq in the years before the war – before Iraq became a partisan issue. The article concludes:

“To judge by his unequivocal pronouncements pre-2003, and as improbable as it sounds now, that someone might well have been Al Gore, the erstwhile hawkish Vice President who had championed the Iraq Liberation Act, or indeed John Kerry, who back in 1998 told Scott Ritter that containment of Saddam was not working and that the time had come to use force. If Bush had failed to act, either one of these two men might have come to office in January 2005 publicly prepared to deal with the “gathering threat” that his predecessor had unaccountably allowed to grow larger and closer and ever more virulent.”

Next Up…. Oil!

My next post – oil and energy, and why partisan stupidity has prevented America from achieving energy independence.


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