Secretary of State Hillary Clinton says the countries with the highest tax-to-GDP rates in the Western Hemisphere also have the healthiest economies. Mrs. Clinton is just revealing how ignorant she is of economic science. FULL ARTICLE by Clifford F. Thies
Source link: http://archive.mises.org/12913/excuse-me-madam-secretary/
Excuse Me, Madam Secretary
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What did you expect? She was trained as a lawyer…
ludwig:
That’s less than fair; very many have been so trained, including many outstanding contributors to society. Her training (insofar as relevant to you and me) was as a socialist operative.
I don´t believe economists would say such things. I for sure wouldn´t.
Gee – I wonder why that does not scale down to the State level? (California has a GDP that is higher than most European countries.) At the state level in the US, the states with high taxes are the ones that are in the most trouble. High taxes cause companies to relocate to lower tax states (the Dukakis effect), or offshore.
Talk about fatal conceit. This is just more of the same pro state intervensionist talk to which Mrs. Clinton has us accustomed. The fact remains, that to the extent that latinamerican countries have openned their econimies, progress and prosperity has come in the process. I live in Costa Rica, which is a small but vibrant country, no where near the static and economically dependent country it was 20 years ago.
Statists on the American left used to say, “But in Europe… “. Can’t say that now. So some of them are now taking to “But in South America… “.
Stretch. Yawn.
“But in Sweden… “
I don’t think she’s a socialist per se, but rather a very confused capitalist that is more then likely mystified by how she and Bill came into their own incredible wealth. What she apparently takes for granted is that if Reagan had not come along and pushed for the re-writing of the oppressive 1954 tax code (TRA86), she would have never had the $24million in accumulated wealth to piss away on her ego gratifying run for the Presidency.
Trust me “It takes a villlage” Hillary is a socialist. I didn’t think there could be such a thing as a confused capitalist.
They came into their incredible wealth through the good old boy system in Arkansas.
I’m not sure Hillary even really believes what she says. Hillary is a populist – spouting whatever will further her political power and continued “relevance” to public service.
By Ms. Clinton’s logic, if we just taxed 100% of everyone’s income, we’d all be rich!
Holy cats. This is just like the “government can print more money” meme: I used to use it as a sarcastic gibe against statists but it turns out to be the plain old truth of what they believe. So I can no longer use “they think we can tax our way to prosperity” as sarcasm; they really believe that too.
The countries with the highest tax-to-GDP rates in the Western Hemisphere probably do have the healthiest economies – but not because of them, rather that they can’t get that high if the economies aren’t strong enough to carry them, and there are currently no countries and economies that don’t have profligate politicians, bankers et al who are running those rates up as high as they can get them. If there were a country and economy without that sort of thing going on, it would get quite a lot healthier and might produce an outlier on the curve, i.e. one of the countries with the lowest tax-to-GDP rates in the Western Hemisphere and one of the healthiest economies. But there aren’t any countries like that these days.
Just a footnote. Brazil is growing but no significant reform has been made in the last 5 years. So although the country has indeed embraced many free market reforms in the 80′s and 90′s the current “wave” of spectacular growth is much credit (not matched by increased savings) fueled.
I just came back to Brazil last night, and it’s incredible how the sentiment in the business comunity is stirred up. Everyone says the contry is really “booming”.
Mises Brasil.org has written a few articles on the subject, however in Portuguese.
Hmm. Seems like an interesting read. Now, whether or not Mrs. Cinton is a socialist is beside the point, she’s pro state: enough said. Nonetheless, she does represent a sort of American left (liberal) very similiar to European social democrats whose leaders are, usually, pretty wealthy individuals. A strange but powerful lot indeed.
Nixon said: “We’re all Keynesians now.” No doubt, although discredited , paraphrasing Mark Twain… rumors of it’s demise are highly exaggerated. It remains the economic dictum to which most goverments adscribe. And, why shouldn’t if it’s a way of justifying the status quo?
Economics 101
When taxes are low the economy will grow; when taxes are high the economy will die. Why is this so hard to understand?
It’s definitely an economic fundamental. But, why,then is it still ignored? Over importance (and over indulgence) given to the political classes, that’s why. If you eliminate government interventions, guess what, they’ll be no need for government. Plus, all the pressure groups will have no one to live their lives for them, and will have to reach their goals like everyone else does…through personal responsibility , hard work and offering the better product (in this case, ideas).
If you eliminate government interventions, guess what, you have Somalia. The fastest growing economy right now and over the last decade, China, has top tax rates of 45%, much higher than the US. There’s no “theory” there, just facts.
Pull your heads out of your a**es.
Ah, it’s so unfortunate that the world doesn’t live in the models created by economists. Everything is so simple in the world of models and theories.
Unfortunately, in the real world, the models and theories don’t hold up so well. I find it interesting that the author makes a big point about what the theory is behind her comments. As though in a functioning economy all the actors look to some model to determine what their next action should be. It’s silly.
Yes, according to certain models and theories, lower taxes should lead to faster growth. But let’s take that to the extreme (as other comments have done with Clinton’s comments): If we eliminate taxes altogether we should get the fastest possible state of growth. But that’s only the model. In the real world we get…Somalia. So if we want to follow a model, we can follow a model that says less taxes are always better and wind up in Somalia. Or we can follow a model that says more taxes are always better and wind up in Cuba. Both destinations suck. That’s why your models and theories are stupid.
Take a look at the real world. Fastest growing major economy right now and over the last decade? China. Top income tax rate in China? 45%. Nation with highest median income? Norway. Government spending as percent of GDP in Norway? ~50%. US States with the highest tax burden? New Jersey, New York, Massachussetts, Connecticut, California… States with the highest per capita GDP? New Jersey, New York, Massachussetts, Connecticut, California… States with the biggest budget problems right now? California…uh, California, California… What’s the THEORY that explains all this? I don’t know. But it doesn’t need a freakin’ theory to be TRUE.
Here’s a theory: When nations are run by reasonably competent and stable governments that invest a reasonable amount of tax revenue in assets that make society better off as a whole while allowing citizens enough freedom to prevent authoritarian economic train-wrecks, those nations will prosper. Of course, that begs the question of what’s “competent”, what’s a “reasonable amount”, what assets make society “better off”, and what’s “enough freedom”. And in the real world, there’s no black and white answer. That’s what democracy is *supposed* to be about, everybody coming to some sort of consensus we can all tolerate on those questions.
Instead, in America we’ve gotten a bunch of ideologues with their brain-dead models calling everybody who disagrees with them and their stupid model either evil or retarded. Grow up, people. Put your models back in the toy chest where they belong and try to participate in the grown up world we have to live in together.
I’d forgotten about the “facts” the author did mention in this article. Once again, the myth of huge economic growth thanks to Reagan is perpetuated. Unfortunately, while it’s a popular story, the facts don’t back it up. Go to measuringworth.com and compare GDP growth during the Reagan era to just about any other period in history. You’ll find GDP growth in the 80′s was among the worst decades in American history. It was very slightly better than the 70′s, but far behind the 60′s, 50′s, 40′s, the New Deal years, etc. etc. Reagan does better than Hoover, Carter, and W…and that’s about it. Hardly the stuff of legends…
Although we agree that there are no absoluted, there are definitely better options. Somalia? Sure, if you compare it to the US, it would probably seem like a mess. But, if you compare to itself during it’s military period…then, it’s a different appraisal. How many years did it last in a state of anarchy? Maybe some sort of mixed economy would have been better. Although, there’s no doubt that during their period of anarchy, they were better off. As for China, there’s no doubt that their current way of doing things has paid, although there maybe other factor which are peculiar to it that have something to do in the process. Eventually, though, they’ll have to take a decision as to just how much liberty they’ll allow their people to have. As for economists and their theories and models, these sort of questions are not exclusive to economics, even exact sciences hsve their skeptics. Its the eternal dichotomy of reason and empiricism. This is why I’m a big fan of Austrian economics, mainly because it tries to explain and not just predict results. This is why there are few absoluted.
As to democracy being what it’s “supposed” to be,well, that to is a normative. It to is theory just like the one’s you’ve so openly criticized. At any rate, how do you define it? Certainly, what we currently accept as democracy is not the same as the Greeks or, even the Americsn founding fathers thought it was. Whenever you try to explain or control something, you necessarily have some sort of theory of how things work. Ever since Plato (and probably before), people have believed that threw government you can make society better. The key word here is control, or, in other words producing certain results. Does a highly complex system submit to these rules? There is no doubt that empirically (and not just theoretically) the more economic freedom the more developement. Just what the balance between government and freedom should be is highly contingent. This is why Hayek considered society a spontaneous system, behaving in a stochastic fashion. An example of chaos theory.The fact that you don´t believe in economic is itself a theory. So, although no doubt our personal likes and dislikes will get into our arguments. It’s precisely this diversity that makes mayority rule so difficult.
One more thing, I ‘m not Ayn Rand so I’m not in the habit of calling people “evil”, although, if I hapoen to disgree I may say that person is wrong.
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