If you were to ask me what the greatest intellectual error of the past fifty years has been I wouldn’t hesitate. Shareholder value. It’s an easy response. Yes, it reflects my own curious interest in the fundamentals of business and its intersection with economics, but it is also emblematic of so much more.Distribution.
Derived as it is from the wrong turn in economics and politics in the middle of the last century it carries with it so many of the ill founded ideas that have brought us all to where we are now: bedeviled once more by the social question....
Monday, March 8, 2021
The Social Question — Peter Radford
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There’s a curious fact about the wealth and growth of nations that you rarely see mentioned: No country has ever joined the modern, high-productivity, rich-country club without massive doses of redistribution, and universal government programs for social support and financial security. Not one. Ever.
You can get a rough feel for the scale of those programs here (the OECD countries pretty much constitute the “rich-country club”):
(graph here)
There are a zillion other measures you could plot, but they paint roughly the same picture. In this measure, the richest countries all devote fifteen to thirty percent of GDP to social spending. As Bruce Bartlett pointed out recently, Germany — a darned “conservative” country that is thriving today, and which rode out our recent economic Great Whatever better than almost any other country — started building its welfare state more than 150 years ago.
Now contrast these countries to all the countries that have eschewed those freedom-sapping, serf-ifying government programs, and that have emerged as thriving, prosperous utopias of liberty.
Name one.
Why hasn’t it happened? Not even once.
If countries like that were in fact so economically efficient, shouldn’t we expect to have seen at least one of them emerge, and surge ahead of all the rest — outcompeting all the others, in a very Darwinian sense? Isn’t that the prediction that libertarians and conservatives are making? How can we explain the complete and abject failure of those predictions?
Do read the whole article, linked below:
source: Why Welfare and Redistribution Saves Capitalism from Itself
The use of ration cards by the US government was a clear signal of their faith in markets.
As for eliminating the welfare state... you have to eliminate civilization. That's sort of the whole point of civilization: to attain higher standards of living. If we were actually civilized, welfare would exist informally.
As Bruce Bartlett pointed out recently, Germany — a darned “conservative” country that is thriving today, and which rode out our recent economic Great Whatever better than almost any other country — started building its welfare state more than 150 years ago.
Prussian Otto von Bismarck, first chancellor of Germany, established the modern welfare state to prevent a socialist revolution. Pretty smart guy, that Bismarck.
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