[ExI] Meme change not person death/was Re: Friedman and negative income tax

Stathis Papaioannou stathisp at gmail.com
Sat May 9 07:01:13 UTC 2009

2009/5/8 painlord2k at libero.it <painlord2k at libero.it>:

> Most developing nations have not the same "resources" like the developed
> ones.

If you mean natural resources, on average developing nations don't
have fewer than developed nations. But one advantage they have over
developed nations (according to the theory that government services
make people lazy) is a lack of any social security safety net. People
have to work hard just so they and their family can survive, and they
have to work extra hard if they want to pay for decent education,
health care and so on. This is stuff everyone gets for free or almost
free in most developed countries, even the US.

> And many, until yestersay, were leaded  by socialist governments. They
> started developing with 10% yearly growth when they moved from socialism to
> a freer economy.
> For them, social security and other government services are luxuries they
> can not afford.

Right that they can't afford it, but wrong that most of them are
socialist. For example, most of South and Central America for the past
century has been governed by US-supported regimes that are even more
assiduous in suppressing any sort of left wing activity (opposition
parties, unions, free speech) than the US itself. There are some
exceptions, like Cuba - and look at what the US did there. The
problem, you see, is that whether through wisdom, stupidity or outside
manipulation, left to their own devices the people might introduce
socialist policies; and the only way to avoid this if you are the
government and you are sure you know what is best is to actively
suppress dissent.

> As the social services grew the economy started to slow down.
> Italy grew at 10% rates until 1960, then the Center-Left governments started
> to form and the rates went to 7-8%, then in the 1970 the rates went around
> 5% and to 3% in the 1980. In the 1990 they were 2%-0% and now they are
> negatives.

The usual pattern with economic growth in developing countries is
rapid growth at the start then a slowing down as they reach the levels
of the more developed countries. It seems that the plateau is more due
to technological factors than economic ones. There are many examples
of this other than Italy. For example, Singapore went from a poor
country to a rich country in the space of a few decades, but then
growth slowed down despite continuation of much the same economic
policies (Lee Kwan Yew would not have allowed it any other way). So
Singapore has been able to roughly match, but not surpass the standard
of living found in other developed nations in Europe and North

This is not to say that tax and welfare spending is without
qualification a good thing. There is a certain optimal level of each.
Too much, and no-one has an incentive to work; too little, and the
average quality of life goes down, and ultimately you end up with
ill-educated, dissatisfied masses resulting in a running down of the
country's human capital. For all his socialist-hating ways, Lee Kwan
Yew made it a priority that every Singaporean would have a good
education and adequate housing, the latter through generous subsidies
for first home buyers.

> In between the government moved from taking the 27% of the GDP of Italy in
> the 1970 to the 43% now (computed with a 20% of the economy in the black
> market, so the rates paid by the "honests" is over 50%). I have no numbers
> for the years before 1970, but I would suppose the burden of taxes was lower
> than 20%.
> An example of socialism is in Finland the fact that the car outside the
> social housing are bigger, more costly than the cars out of private housing.
> Why? because the people in social housing have more money available for cars
> as they spend less for housing.
> The same is true in Italy, where they sell more furs in Sicily than in
> Lombardy. In Italy, a large part of the political discourse, in the last
> twenty years, is about how much taxes are paid by the North regions that go
> to the South Regions for welfare. This helped the people there? Not much;
> but surely helped Mafia, Camorra and N'drangeta to expand their business.
> Welfare to the mobsters.

These are strange observations. You haven't explained why northern
Italy is wealthier than Southern Italy and less prone to organised
crime, or why Finland, more socialist than Italy has ever been, has
done so well economically, especially in the last couple of decades.
Also, within Italy, the leftists (including the communists) have held
power consistently in Emilia-Romagna, one of the wealthier northern
provinces. It's not as simple as your contention that any socialist
measures inevitably lead to economic stagnation.

Stathis Papaioannou

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