Topic: International Economics and Development

New Data Show Lagging Living Standards for Welfare States

The Paris-based Organization for Economic Cooperation and Development is hardly a hotbed of free-market thought. So it is particularly remarkable that the OECD has just released new figures on per capita gross dometic product and per capita consumption.

The latter data, for AIC (“actual individual consumption”), are especially interesting since they allow comparisons of living standards across nations. For the 30 member nations of the OECD, the United States is second, with per capita consumption that is 152 percent of the OECD average, trailing only the small tax haven of Luxembourg.

Europe’s major welfare states, by contrast, do not fare so well. France is at 106, Sweden at 104, and Germany at 103, meaning that their living standards are only about 70 percent of U.S. levels.

The report also has data for both 2002 and 2005. During that period, Iceland enjoyed the biggest increase in living standards, climbing from 113 percent of the OECD average to 128 percent of the average. Not coincidentally, Iceland has been lowering tax rates and reducing the burden of government.

European Politicians, Global Warming, and Moral Preening

European leaders (and their doubtlessly bloated staffs) plan to fly to Lisbon to sign a treaty and then fly to Brussels for a summit the following day.

This has caused a bit of griping, but not because taxpayer funds are being wasted, but rather because all those private jets will cause a large carbon footprint. So in a hollow gesture, the political heads of three countries are going to share a jet.

Gee, how thoughtful.

The EU Observer reports on the farce:

At the insistence of the Portuguese EU presidency, all 27 EU leaders and their delegations will fly to Lisbon on 13 December for a special signing ceremony of the bloc’s new treaty — and then jet on to Brussels for a regular EU summit meeting the next day. The cumbersome travel arrangements allow Portugal to call the new treaty the ‘Lisbon Treaty’ — but they have also led to criticism that EU leaders are setting a bad example by preaching about green values but then unnecessarily contributing to global warming through the short round trip. To reduce at least part of the summit’s carbon footprint, the Benelux leaders will board a Dutch government airplane when flying to and from Lisbon — something suggested by Mr Balkenende.

Without the Farm Bill, We Would All Starve Tomorrow

Farmers’ groups would have us believe that without the multi-billion dollar dollops of taxpayers’ money that flow to farmers, the abundance of food we will all tuck into tomorrow would be reduced to a few grains of (probably foreign) rice. So, with Thanksgiving upon us, I thought I would provide an update of the Farm Bill debate.

Because of procedural wranglings, the Senate last week suspended consideration of the farm bill, possibly until early next year. The Republicans objected to Senate Majority Leader Harry Reid’s wish to limit the number of amendments that could be offered to the farm bill, meaning that time-honored Republican favorites such as the estate tax could not be considered. So, the bill was pulled. Assuming the Senate can pass a re-introduced bill in December, it will probably not go to conference before January.

In the meantime, our esteemed lawmakers are trading jibes about who is to blame for the current gridlock. Pity the farm-state Senators who have to go back to constituents to explain why the farm bill has been held up. In practice, so long as a bill is passed sometime in early 2008, it will probably not affect many farmers. Just in case though, and to placate farmers who say they are incapable of making planting decisions or securing loans without some sort of guarantee of government support, a bill to extend the current farm bill has been introduced.

What does all this mean for reform? Is the current stasis a positive sign? It would be if it reflected a deep unease about the farm bill and a fundamental, principled objection to the very premise of American farm policy. But, alas, so far the debate has been characterized by differences over the best way to deliver farm welfare (see my previous post) and how to spend any savings from higher commodity prices. Even the “alternative” farm bill, introduced by Sens. Richard Lugar (R, Ind.) and Lautenberg (D, N.J) delivers only modest relief to taxpayers, instead spending money on things such as the “Seniors Farmers’ Market Nutrition Program” ($200 million) and $75 million for “socially disadvantaged farmers and ranchers.”

President Bush’s veto threat still looms but, again, I have doubts about how committed he is to vetoing the bill, especially as the presidential election draws near. And, after all, he signed the egregious 2002 Farm Bill.

Britain’s “Incapacity” Racket

The United Kingdom has an “Incapacity” program for people allegedly unable to work. And like the “Disability” portion of America’s Social Security program, the British system is a magnet for fraud. The Times reports that more than $8 million was paid to people who are “too fat” to work. But this is a drop in the bucket compared to the people receiving handouts for mental health reasons. In an obvious sign that people are scamming the system (unless the UK’s government-run health care system is even more dangerous than current stories suggest), the number of people who are ostensibly incapacitated has tripled in less than 30 years:

Almost two thousand people who are too fat to work have been paid a total of £4.4 million in benefit, it emerged last night. Other payments went to fifty sufferers of acne… Billions of pounds is being paid in benefits to people claiming to be unable to work because they suffer from depression, stress, fatigue and unknown or unspecified diseases. …Frank Field, a former Social Security Minister, said last night that too many people were working the incapacity benefit system to avoid work. “It is a racket, which governments have allowed to exist for far too long. I do not blame people for working the system, it is the job of politicians to stop them doing it.” …The number on incapacity benefit has more than trebled since 1979… More than £2 billion was paid in 2006-07 for mental health complaints, including £518 million to those with what are described as “unknown and unspecified” diseases.

WHTI Should Go

Rep. Bart Stupak (D-MI) has had the good sense to introduce a bill to repeal the Western Hemisphere Travel Initiative.

WHTI is a classic self-injurious overreaction to the threat of terrorism. The reductions in lawful trade and travel produced by WHTI and the direct costs of the program are greater than the damage to the country that would be averted by this readily defeated “security” measure.

Anti-Immigrant Opinions are Weakly Held II

[Here’s Anti-Immigrant Opinions are Weakly Held I.]

In his book The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 Yale history professor Paul Kennedy makes the case that, historically, great powers have risen to a point where they have become overextended because of their imperial commitments and the expenditures needed to defend them, at which point they have collapsed.

I was reminded of this when I saw the television ad Rep. Tom Tancredo is running in Iowa. (It’s getting much more play in the blogosphere than he could ever afford to buy.)

By equating immigrants to terrorists, this leader of the anti-immigrant right is shedding credibility - the coin of the political realm - at a furious pace. His argument just doesn’t square with the real world or the common sense judgments good American people make for themselves.

Anti-immigrant opinions have reached their apex. The cartoonish quality of Tancredo’s hysteria-mongering presages the fall. See for yourself.

Sarkozy Attacks Capitalism Again

French President Nicolas Sarkozy may be “right wing” by French standards, but that still puts him on the left side of the spectrum on economic issues. In a recent speech, he again embraced protectionism and said Europe should avoid “untrammelled capitalism.” But since Europe has avoided so-called untrammeled capitalism for the past 100 years or so, he can probably put his mind at rest. The EU Observer reports:

French president Nicolas Sarkozy has outlined a vision for Europe that would see “untramelled” capitalism pushed far down the political hierarchy to be replaced by a focus on cultural and spiritual issues with more than a hint of European protectionism. …Noting that “economic values seem to win the day over other values,” Mr Sarkozy said that it is a mistake to overlook culture. …The French leader gave a lot of time to protectionism - a concept that has fallen out of favour in the EU since the more market-oriented eastern member states joined the bloc in 2004, coupled with the current European Commission with its strong liberal profile. “The word protection should be not be outlawed,” said the president adding that “we must be able to protect ourselves as much as others do.” …He went on to say that while Europe has chosen a market economy and capitalism, this should not give rise to “untrammelled capitalism.”