The former communist countries in the last century had very limited or no private enterprises at all. The share of government expenditures to GDP was almost 100 percent. The higher the share of government in GDP the more socialized the policies are.
The share of government in the Western economies is quite high. They have public education, public health, public services, banks, government monopolies, public services, etc, i.e., socialized policies.
Here is a plot of the average government expenditures to GDP ratio over the period 1990-2019 (source: here). The Asian countries, Singapore, Hong Kong, and Taiwan have smaller shares of government in output.
The more important question is whether the increase in government share in output has any relative benefit? Are people better off? Here I plot the average growth rate of real GDP per capita at constant prices (in purchasing power parity; 2011 international dollar) over the period 1990-2019.
The Asian countries are on top. The have relatively more private free market and higher growth rate of real GDP per capita in than all Western countries.
Finally, I put the two data together to show the negative correlation between the share of government in the economy and the richness of people. The Asian countries are in the upper left corner of the graph, where there is high income growth and less government. The Western countries are mostly in the middle and the lower right corner with less income growth and more government.
More government means more socialism, bigger public sector, and relatively poorer people.
The new generations of Americans and Western Europeans, including New Zealand, do not remember the communist countries of the last century. Today, many people, seem to favor socialized policies. They want more government even though they know that more government means more inefficiency, more regulations, more corruption, more interventions, and less freedom, etc.
They want free education, free healthcare, etc. even though they know that people have to pay more taxes for them and they would get lesser quality services.
The argument is that they care more about fairness and equality.
Thomas Piketty, a famous French economist, proposes a tax on wealth to narrow the gap between the poor and the rich, i.e., reduce inequality. But why propose a policy to take money from a few wealthy people to give to the poor instead of a policy to enable the poor to be rich? Why not Italy, for example, which is in the lower right corner of the plot above be like Taiwan at the upper left corner?
People should read more about the communist countries. It is true that 90 percent of the people were living at the same level, but there were elites who lived significantly lavish life. In fact there were only two distinct classes: the people and the elite.
There is a lot of corruption in the West. There is no free market. Big private businesses do not like free market. They are crony capitalists. They benefit from the government in many different ways, e.g., subsidies, grants, tax exemptions, quotas, tariffs on foreign imports, bailouts, etc.
There is a wide revolving door, where these guys go in and out of government. For example, a big company CEO becomes a minister who bails out his friends, go back to the private sector, then come back to the government again a few years later. If people are concerned about corruption, they should know that the main cause of it is more government. Communist and socialist countries had corruption too.
Young people who look up for a better future must think hard about a new form of a political system. They are surely capable of charting new future. Fundamentally, they should ask if more government reduces economic freedom (free market and perfect competition...), if it reduces civic freedom (free speech and free movement...), and if it reduces political freedom. The data show that more government reduces freedom.
The share of government in the Western economies is quite high. They have public education, public health, public services, banks, government monopolies, public services, etc, i.e., socialized policies.
Here is a plot of the average government expenditures to GDP ratio over the period 1990-2019 (source: here). The Asian countries, Singapore, Hong Kong, and Taiwan have smaller shares of government in output.
The more important question is whether the increase in government share in output has any relative benefit? Are people better off? Here I plot the average growth rate of real GDP per capita at constant prices (in purchasing power parity; 2011 international dollar) over the period 1990-2019.
The Asian countries are on top. The have relatively more private free market and higher growth rate of real GDP per capita in than all Western countries.
Finally, I put the two data together to show the negative correlation between the share of government in the economy and the richness of people. The Asian countries are in the upper left corner of the graph, where there is high income growth and less government. The Western countries are mostly in the middle and the lower right corner with less income growth and more government.
More government means more socialism, bigger public sector, and relatively poorer people.
The new generations of Americans and Western Europeans, including New Zealand, do not remember the communist countries of the last century. Today, many people, seem to favor socialized policies. They want more government even though they know that more government means more inefficiency, more regulations, more corruption, more interventions, and less freedom, etc.
They want free education, free healthcare, etc. even though they know that people have to pay more taxes for them and they would get lesser quality services.
The argument is that they care more about fairness and equality.
Thomas Piketty, a famous French economist, proposes a tax on wealth to narrow the gap between the poor and the rich, i.e., reduce inequality. But why propose a policy to take money from a few wealthy people to give to the poor instead of a policy to enable the poor to be rich? Why not Italy, for example, which is in the lower right corner of the plot above be like Taiwan at the upper left corner?
People should read more about the communist countries. It is true that 90 percent of the people were living at the same level, but there were elites who lived significantly lavish life. In fact there were only two distinct classes: the people and the elite.
There is a lot of corruption in the West. There is no free market. Big private businesses do not like free market. They are crony capitalists. They benefit from the government in many different ways, e.g., subsidies, grants, tax exemptions, quotas, tariffs on foreign imports, bailouts, etc.
There is a wide revolving door, where these guys go in and out of government. For example, a big company CEO becomes a minister who bails out his friends, go back to the private sector, then come back to the government again a few years later. If people are concerned about corruption, they should know that the main cause of it is more government. Communist and socialist countries had corruption too.
Young people who look up for a better future must think hard about a new form of a political system. They are surely capable of charting new future. Fundamentally, they should ask if more government reduces economic freedom (free market and perfect competition...), if it reduces civic freedom (free speech and free movement...), and if it reduces political freedom. The data show that more government reduces freedom.
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