Topic: General

The Rise and Fall (and Rise) of Sweden

I’m in Sweden today, where I just spoke before Timbro (a prominent classical liberal think tank) about the US elections and the implications for public policy.

My main message was pessimism since neither Donald Trump nor Hillary Clinton support genuine entitlement reform.

But I’ve addressed that topic many times before. Today, motivated by my trip, I want to augment my analysis about Sweden from 10 days ago.

In that column, I highlighted some research from Professor Olle Kranz showing that Sweden became a rich nation during a free-market era when government was relatively small. And as you can see from his chart (I added the parts in red), this is also when per-capita economic output in Sweden caught up with - and eventually surpassed - per-capita GDP in other advanced countries.

Then Sweden began to lose ground. Some of this was understandable and inevitable. Sweden didn’t participate in World War II, so its comparative prosperity during the war and immediately afterwards was a one-time blip.

But the main focus of my column from last week was to show that Swedish prosperity began a sustained drop during the 1960s, and I argued that the nation lost ground precisely because statist policies were adopted.

In other words, Sweden enjoyed above-average growth when it relied on policies I like and then suffered below-average growth when it imposed the policies (high tax rates, massive redistribution, etc) that get Bernie Sanders excited.

Should You Take the Government’s Dietary Advice?

Recently, I’ve worked with the excellent Cato Multimedia team on the first edition of a project you’ll be seeing more of: Ask a Cato Expert.

In this first episode, I’ve answered the question of “Should you take the government’s dietary advice?” I highlight the history behind our current dietary guidelines, and come to the conclusion one should not. Please take a look at the video below, and tweet us new questions at #AskACatoExpert!

 

You Gotta Love the Kaiser Family Foundation

The folks at the Kaiser Family Foundation will publish studies that explain how ObamaCare creates “an incentive to avoid enrolling people who are in worse health” such as “by making [insurance] products unattractive to people with expensive health conditions.”

Then, when their own polling shows three of the public’s top four health care concerns are the very sort of health-insurance features ObamaCare pushes insurers to adopt, they spin it as evidence the public does not want Congress to reopen ObamaCare.

Improving American Lab Report—Kinda

Some decent news to report: The latest National Assessment of Educational Progress (NAEP) science results are in, and scores for 4th and 8th graders have improved since 2009, the first year of the test. Unfortunately, 12th grade scores remained flat. Sound familiar?

Why the increases at the lower levels? A lot of people will trot out their pet reform: the Common Core, the Next Generation Science Standards, some federal program—I’ll throw in school choice—but my suspicion is none of these had much effect. My guess is people are simply focusing a little more on science than they were in 2009, driven by their personal feeling that grasping science is important, and will be increasingly so as the economy evolves. At this point many folks have probably been exposed to the mantra “STEM fields, STEM fields, STEM fields” enough times that a new emphasis on science has seeped into their brains, even if they don’t explicitly think to yell at their kids, “Jane and Johnny, STEM is important, and there’ll be no Xbox tonight unless you make a volcano in the kitchen right this instant! I mean it! I’ll get the baking soda…”

Few people could probably tell you what STEM stands for (that would be science, technology, engineering, and mathematics) but they have a strong sense science needs learnin’!

Or that could be wrong, too. If nothing else, it fails to explain why no improvement was seen in 12th grade scores. The fact is, just looking at NAEP scores tells us very little about why we got them, and the best we can do is make educated guesses. There is, frankly, no exact science when it comes to interpreting NAEP—especially given only two or three years of data—even if people may talk like there is.

Proposed Spending Cap in Brazil Could Be a Key for Economic Recovery and Renaissance

One of the most remarkable developments in the world of fiscal policy is that even left-leaning international bureaucracies are beginning to embrace spending caps as the only effective and successful rule for fiscal policy.

The International Monetary Fund is infamous because senior officials relentlessly advocate for tax hikes, but the professional economists at the organization have concluded in two separate studies (see here and here) that expenditure limits produce good results.

Likewise, the political appointees at the Organization for Economic Cooperation and Development generally push a pro-tax increase agenda, but professional economists at the Paris-based bureaucracy also have produced studies (see here and here) showing that spending caps are the only approach that leads to good results.

Heck, even the European Central Bank has jumped into the issue with a study that reaches the same conclusion.

This doesn’t mean balanced budget requirements are bad, by the way, but the evidence shows that they aren’t very effective since they allow lots of spending when the economy is expanding (and thus generating tax revenue). But when the economy goes into recession (causing a drop in tax revenue), politicians impose tax hikes in hopes of propping up their previous spending commitments.

With a spending cap, by contrast, fiscal policy is very stable. Politicians know from one year to the next that they can increase spending by some modest amount. They don’t like the fact that they can’t approve big spending increases in the years when the economy is expanding, but that’s offset by the fact that they don’t have to cut spending when there’s a recession and revenues are falling.

From the perspective of taxpayers and the economy, the benefit of a spending cap (assuming it is well designed so that it satisfies Mitchell’s Golden Rule) is that annual budgetary increases are lower than the long-run average growth of the private sector.

And nations that have followed such a policy have achieved very good results. The burden of government spending shrinks as a share of economic output, which naturally also leads to less red ink relative to the size of the private economy.

But it’s difficult to maintain spending discipline for multi-year periods. In most cases, governments that adopt good policy eventually capitulate to pressure from interest groups and start allowing the budget to expand too quickly.

That’s why the ideal policy is to make a spending cap part of a nation’s constitution.

That’s what happened in Switzerland early last decade thanks to a voter referendum. And that’s what has been part of Hong Kong’s Basic Law since it was approved back in 1990.

A Common Core Buyer’s Too Late Remorse

E.D. Hirsch—author of the lightning rod Cultural Literacy: What Every American Needs to Know, and a tireless advocate of content-heavy education—has just spoken truth about the Common Core. An Education Week article heralding his latest book reports that:

He calls the reading standards “empty” and “deeply flawed” because they teach all-purpose reading-comprehension strategies rather than facts and information. An entire chapter of his new book is devoted to what he refers to as “the tribulations of the common core.”

“The people who developed the common core had a choice. Either [the standards] were going to be educationally correct or they were going to be politically viable,” he said. “They chose the second.” Forty-six states agreed to adopt the standards right away, which he argues “could only be accomplished if you didn’t specify the content of the curriculum.”

The Core is indeed very light on content in English language arts, Hirsch’s primary concern. But it hasn’t changed between 2010 and today, yet Hirsch endorsed it—emphatically!—in 2013.

As I have pointed out, Hirsch’s endorsement is one of many pieces of Core support that have sewn major confusion about the Core, befuddlement that supporters have loved to pin on opponents. But the reality is that Core supporters, seemingly obsessed with getting standards nationalized, have tried to make the Core sound like all things to all people: national and comprehensive, locally controlled and minimalist. Couple that with federal coercion, and the Core has thrown schools nationwide into utterly avoidable disarray.

But there is a deeper reality illustrated here: It is very difficult, short of a dictatorship, to impose content both deep and broad on diverse people. Why? Because diverse people will not agree on what that content should be. Just evolution, or also intelligent design? The Bible, or I Am Jazz? Ethnic studies, or commonality? And the list goes on…and on. This is precisely why for the Core to be “politically viable” it had to be largely bereft of what Hirsch has spent decades crusading for: rich content.

If you want deep, robust content, the way to get it is the opposite of nationalization: educational freedom.