Does “Wagner’s Law” Mean Libertarians Should Acquiesce to Big Government? | International Liberty

Back in October, Will Wilkinson of the Niskanen Center wrote a very interesting – albeit depressing – article about the potential futility of trying to reduce the size of government. He starts with the observation that government tends to get bigger as nations get richer.

“Wagner’s Law” says that as an economy’s per capita output grows larger over time, government spending consumes a larger share of that output. …Wagner’s Law names a real, observed, robust empirical pattern. …It’s mainly the positive relationship between rising demand for welfare services/transfers and rising GDP per capita that drives Wagner’s Law.

I’ve also written about Wagner’s Law, mostly to debunk the silly leftist interpretation that bigger government causes more wealth (in other words, they get the causality backwards), but also to point out that other policies matter and that some big-government nations have wisely mitigated the harmful economic impact of excessive spending and taxation by having very pro-market policies in areas such as trade and regulation.

In any event, Will includes a chart showing that there certainly has been a lot more redistribution spending in the United States over the past 70 years, so it certainly is true that the political process has produced results consistent with Wagner’s Law. As America has become richer, voters and politicians have figured out how to redistribute ever-larger amounts of money.

There’s a lot of speculation in Washington about what a Trump Administration will do on government spending. Based on his rhetoric it’s hard to know whether he’ll be a big-spendin…

Source: Does “Wagner’s Law” Mean Libertarians Should Acquiesce to Big Government? | International Liberty

The Myth and Reality of Trickle-Down Economics | International Liberty

…allowing everyone to pursue all the opportunities they can in the marketplace, with the minimal level of taxation and regulation, will create generalized prosperity. The value of cutting taxes is not just cutting them for higher income groups, but for everyone. Letting everyone keep more of the value they create through exchange means that everyone has more incentive to create such value in the first place, whether it’s through the ownership of capital or finding new uses for one’s labor.

Now that we’ve dispensed with the silly left-wing caricature of trickle-down economics, let’s discuss how there actually is a sensible way to think about the issue.

Source: The Myth and Reality of Trickle-Down Economics | International Liberty

The Recipe for Job Creation: Less “Help” from Washington | International Liberty

The entire video was very concise, lasting less than four minutes, so it only scratched the surface. For those seeking more information on the topic, I would add the following points.

  1. Businesses will never create jobs unless they expect that new employees will generate enough revenue to cover not only their wages, but also the cost of taxes, regulations, and mandates. This is why policies that sometimes sound nice (higher minimum wages, health insurance mandates, etc) actually are very harmful.
  2. Redistribution programs make leisure more attractive than labor. This is not only bad for the overall economy because of lower labor force participation. This is why policies that sometime sound nice (unemployment benefits,food stamps, health subsidies, etc) actually are very harmful.

The American economy is in the doldrums. And has been for most this century thanks to bad policy under both Obama and Bush. So what’s needed to boost growth and create jobs? A new video from …

Source: The Recipe for Job Creation: Less “Help” from Washington | International Liberty

Notwithstanding Keynesian Fantasies, Redistribution Does Not Stimulate Growth — International Liberty

 

Back in 2010, then-House Speaker Nancy Pelosi actually claimed that paying people not to work would be good for the economy. Wow, that’s almost as bizarre as Paul Krugman’s assertion that war is good for growth. Professor Dorfman of the University of Georgia remembers Pelosi’s surreal moment and cites it in his column in Forbes, […]

via Notwithstanding Keynesian Fantasies, Redistribution Does Not Stimulate Growth — International Liberty

Ce qui est vu et ce qu’on ne voit pas

I find it fascinating, if not reassuring, in the struggles for economic liberty that the same feeble arguments against free commerce and in defense of statism, even 166 years ago in post-revolutionary France, were peddled as progressive and as our salvation from the evils of commercialism on society .  It was a lie then, just as it is today.  

Robert Nelson

Bastiat.2That which is seen, and That Which is Not Seen; by Frederic Bastiat

On Intermediaries:

While the exaggerated development of public services, by the waste of strength which it involves, fastens upon society a fatal sycophancy, it is a singular thing that several modern sects, attributing this character to free and private services, are endeavouring to transform professions into functions.

These sects violently oppose what they call intermediates. They would gladly suppress the capitalist, the banker, the speculator, the projector, the merchant, and the trader, accusing them of interposing between production and consumption, to extort from both, without giving either anything in return. Or rather, they would transfer to the State the work which they accomplish, for this work cannot be suppressed.

The sophism of the Socialists on this point is showing to the public what it pays to the intermediates in exchange for their services, and concealing from it what is necessary to be paid to the State. Here is the usual conflict between what is before our eyes, and what is perceptible to the mind only, between what is seen, and what is not seen.

It was at the time of the scarcity, in 1847, that the Socialist schools attempted and succeeded in popularizing their fatal theory. They knew very well that the most absurd notions have always a chance with people who are suffering; malesuada fames.

Therefore, by the help of the fine words, “trafficking in men by men, speculation on hunger, monopoly,” they began to blacken commerce, and to cast a veil over its benefits.

“What can be the use,” they say, “of leaving to the merchants the care of importing food from the United States and the Crimea? Why do not the State, the departments, and the towns, organize a service for provisions, and a magazine for stores? They would sell at a return price, and the people, poor things, would be exempted from the tribute which they pay to free, that is, to egotistical, individual, and anarchical commerce.”

The tribute paid by the people to commerce, is that which is seen. The tribute which the people would pay to the State, or to its agents, in the Socialist system, is what is not seen.

In what does this pretended tribute, which the people pay to commerce, consist? In this: that two men render each other a mutual service, in all freedom, and under the pressure of competition and reduced prices.

Debt, Bubbles, and Reckless Government | International Liberty

danmitchel

Dan Mitchell

I don’t like deficit and debt, to be sure, but government borrowing should be seen as the symptom. The real problem is excessive government spending.

This is one of the reasons I’m not a fan of a balanced budget amendment, Based on the experiences of American states and European countries, I fear politicians in Washington would use any deficit-limiting requirement as an excuse to raise taxes.

I much prefer spending caps, such as those found in Hong Kong, Switzerland, and Colorado. If you cure the disease of excessive government, you automatically ameliorate the symptom of too much borrowing.

That being said, the fiscal chaos plaguing European welfare states is proof that there is a point when a spending problem can also become a debt problem. Simply stated, the people and institutions that buy government bonds at some point will decide that they no longer trust a government’s ability to repay because the public sector is too big and the economy is too weak.

Source: Debt, Bubbles, and Reckless Government | International Liberty