Tag: welfare state

Canada and Jefferson’s Natural Progress

Thomas Jefferson famously opined that “the natural progress of things is for liberty to yield and government to gain ground,” but Canada has bucked that gloomy forecast in recent years. As my co-authored op-ed in the Washington Post yesterday showed, Canada has:

  • Cut government spending
  • Cut government debt
  • Balanced its budget consistently
  • Pre-funded its version of Social Security to make it solvent
  • Decentralized power within its federation of provinces
  • Cut taxes, particularly corporate taxes 

Meanwhile, the United States has headed in the opposite direction in each of these policy areas. Consider further that Canada has other economic policy advantages over the increasingly uncompetitive welfare state to its south:

  • Canada has more liberal immigration policies for highly skilled workers than does the United States, which has added greatly to the entrepreneurial vibrancy of Canada’s economy.
  • Canada has long had a stable,  efficient, and competitive financial sector, which avoided the government-assisted meltdown that occurred in the United States.
  • Canada has a home ownership rate as high as the United States, yet it does not have a distortionary mortgage interest tax deduction.
  • Canada recently implemented large Roth IRA style savings accounts, which are much more flexible than the U.S. version.
  • The Canadian federal capital gains tax rate is 14.5 percent, which compares to the current 15 percent in the United States and 20 percent under Obama’s tax plan.
  • Canada has no federal ministry or department of education. The K-12 schools are the sole responsibility of the provinces, yet Canadian kids  generally do better than American kids on international tests.
  • In recent years, Canada has probably been more supportive of NAFTA, and free trade in general, than its main trading partner, the United States.

Major pro-market reforms are possible in advanced welfare states – Jefferson can be proven wrong, as Canada illustrates. U.S policymakers can prove Jefferson wrong as well. They can start by cutting spending, decentralizing power out of Washington, and making pro-growth tax reforms in response to globalization, as Canada has, rather than imposing self-defeating “Buy America” provisions and making childish rants about “corporations moving jobs offshore.”

How the Welfare State Destroys Our Liberty

The welfare state has long been one of the most potent arguments for additional restrictions on our freedom.  For instance, you must wear a motorcycle helmet because if you splatter yourself all over the highway the rest of us will be paying your medical expenses. 

One of the factors considered by New Zealand in ruling on applications from would-be immigrants is health.  If you are fat — and thus at risk for various health conditions — forget it!

Reports the Daily Telegraph:

The 51-year-old, who has not been named, argued that her 52 inch waistline was no obstacle to her work as a nurse, which involved 60-hour weeks.

She was offered a job in a home and hospital for the elderly in a provincial town in New Zealand, documents from the country’s Residence Review Board said, and applied for residence in March 2008. But officials rejected the argument that 10 years’ experience as a nurse meant she should be allowed to live there — even though there is a shortage of qualified nurses.

The woman decided to move to New Zealand after a holiday in 2007 and wanted to set up home there with her husband, a crane driver, and her daughter who planned to work in a shop.

But medical advisors calculated that with a weight of 21 stone and height of 5ft 1in, her body mass index (BMI) was 55.2, putting her at a high risk of developing health problems.

This isn’t the first time New Zealand has turned down an applicant for health reasons.  Adds the Telegraph:

In 2007, a British man who moved to New Zealand was told his wife was too overweight to join him.

Taking care of the taxpayers makes sense.  But the right way to do so is not to put them at risk in the first place.  Socializing health care and then allowing government to micromanage everyone’s lifestyle creates a form of soft tyranny through the back-door.  We already see that in America with motorcycle helmet laws, increasing restrictions on smoking, and proposals for special “fat taxes” on disfavored foods.  Unfortunately, these likely are only the beginning.

Washington’s Government-Centric View of the World

Too many people in Washington look out upon the beauty and bounty of America and see a vast wasteland, enlivened only by government programs. If government isn’t doing it, they think, then it isn’t being done. When the Republicans threatened to nick the budget of the National Endowment for the Arts, First Lady Hillary Rodham Clinton wailed that the proposal “not only threatens irrevocable damage to our cultural institutions but also to our sense of ourselves and what we stand for as a people.” Seriously, she thought that if the then-$167 million of the NEA were eliminated, the $37 billion that Americans spent on the arts that year would somehow disappear in a puff of smoke?

Sen. Edward M. Kennedy was even more sweeping when he said  in 1992, “The ballot box is the place where all change begins in America” – conveniently forgetting the market process that has brought us such changes as the train, the skyscraper, the automobile, the personal computer, and charitable or self-help endeavors from settlement houses to Alcoholics Anonymous to Comic Relief.

And today the Washington Post weighs in with the chart below. It’s titled “Percent of GDP spent on social/family expenditures,” and it shows the United States at a shockingly low 0.7 percent, while Obama-esque countries like Sweden and France are above 3 percent. But could it really be true that America spends less than 1 percent of its wealth on families and children? Of course not. The proper title for the chart would be “Percent of GDP spent by government on social/family expenditures.” (Indeed, given the federal nature of the United States, it’s possible that the proper title would be “Percent of GDP spent by the central government on social/family expenditures.”) Every American family spends a large portion of its income on children’s needs, and a larger portion on the needs of children and parents.

The point of the article, as the caption above the chart indicates, is to argue that the Japanese government needs to spend more on programs that would encourage women to join the paid workforce. (If the government hired all the mothers in Japan and paid them to care for their neighbors’ children, would that be a better world? It certainly would raise Japan’s position on the Post’s chart!) If that’s what Post reporters believe, they’re certainly free to advocate that position. But they shouldn’t assume or imply that the government is the entire society. Families in Japan and the United States spend most of their income – or at least most of their after-tax income – on child and family needs. The chart ignores that reality and seeks to make Japanese and Americans embarrassed that government taxes and spends less in their countries than in the European welfare states.

 

Demand for Subsidies

My op-ed on National Review Online today provided new information about the increasing number of federal subsidy programs. The federal welfare state is expanding rapidly.

One friendly reader emailed me:

Ever cross your mind that there’s a reason government programs increase over time? I’ll clue you in: Programs increase because of public demand.

It’s not rocket science, people want more services. Period. Somebody’s got to pay for them. Hences taxes. Or perhaps borrowing. Or a combination of both. In any event, there’s no evidence people are willing to get along with fewer services.

The situation seems simple to me; so why can’t you ideologues on the far right understand what’s going on. Instead, you simply go on bemoaning the existence of programs and taxes you don’t like.

There are numerous problems with this reader’s views, including constitutional problems. But one thing that strikes me is the underlying assumption of the “public interest theory of government,” or the idea that democracies and bureaucracies operate to efficiently provide “services.”

In reality, there are structural problems in government that bias policymakers toward fiscal irresponsibility, as our current $1.8 trillion federal deficit indicates. The issue is not ideology, it is scientific: Does the government actually work as the optimists, like this reader, believe? I think the empirical evidence is in on that question.