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Topic: More on the economic stupidity of economic conservatism (was Martin

Replies: 8   Last Post: Sep 10, 2012 10:42 PM

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Paul A. Tanner III

Posts: 5,920
Registered: 12/6/04
Re: More on the economic stupidity of economic conservatism (was Martin Bic...)
Posted: Sep 7, 2012 1:42 PM
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The further below is yet more fact-denial in the name of economic conservatism.

It's a fact that Norway is vastly more prosperous than the US (again, nominal per-capita GDP twice as large as that of the US), and its a fact that for almost every year of the last few decades, there has been a number of countries of Europe that have had larger nominal per-capita GDPs than the US, these countries including all four major Scandinavian countries and a few others like Switzerland, with others like Netherlands sometimes part of that mix.

That countries have such higher percentages of GDP coming from government than the US also having greater prosperity than the US causes severe cognitive dissonance in the conservative mind - that's quite understandable.

Quite understandable since another conservative myth is that government is necessarily a drag on an economy - this conservative myth is that the greater percentage it is of GDP, the less growth and prosperity for the economy as a whole.

This myth is yet another one held by conservatives that is busted by fact - this fact: When we look at all the countries of the world or even just the countries of the OECD, there is no correlation between growth rates and percentage of the economy that is government. In fact, if there could be any correlation at all to be found, it would the greater the per-capita nominal GDP, the greater the percentage of nominal GDP is government.

One can easily verify this for oneself by looking at lists of countries by per-capita nominal GDP (look at all the socialist/capitalist European and other OECD countries ahead of the US by this measure of GDP)

or by per-capita PPP GDP

and then comparing them to lists of countries by taxes or by government spending as a percentage of GDP (click on the appropriate parts above the list further down the page to get ascending or descending orders for taxes and then for government spending)

(and note that this above page seems to use for its list the PPP measure of GDP).

If there is any statistical trend at all that emerges from the comparison, it is that the richer the country in terms of per-capita GDP, the higher the percentage of GDP is government. (No, such a correlation perfect, but that is not what a trend is.)

(Side note on nominal vs PPP measures of GDP: The much more used measure by professional economists is the nominal measure, since it involves much less extrapolation. See

for an intro on all this.)


Go to Google and enter

"The Effects of Government Expenditures and
Revenues on the Economy and Economic Well-Being:A Cross-National Analysis" pdf

with the term "pdf" outside of the quotation marks. From the pdf file we see the following:


"Among the 21 OECD countries, the United States has the fourth smallest public sector, with total government (federal, state, and local) expenditures amounting to 37% of gross domestic product (GDP). Total government spending accounted for
34% of GDP (the smallest) in Ireland and 59% of GDP (the largest) in Sweden. Countries with larger government spending relative to GDP tend to have higher productivity growth rates and lower relative poverty rates. There appears, however, to be no relation between government spending and GDP growth. [Note: This is GDP growth, not absolute per-capita GDP, which is looked at in the above comparisons with the above lists.]

Public social welfare expenditures are the benefits paid by all levels of government providing support to maintain welfare. The level of social welfare spending varies from country to country - the market-oriented English-speaking countries such as the United States tend to have social welfare expenditures equal to about 15% of GDP, whereas the welfare-state Scandinavian countries spend much more, typically about 25% of GDP. The evidence suggests that public social welfare expenditures do not have an adverse effect on the economy. But these expenditures can improve economic well-being - countries with higher public social welfare expenditures relative to GDP have lower relative poverty rates."

Now in light of all this see the following on Norway's world-beating prosperity:

"Moral economics -> world's highest living standard and greatest

On Fri, Sep 7, 2012 at 12:26 PM, Robert Hansen <> wrote:
> So where does the money come from? Trees?
> Bob Hansen
> On Sep 7, 2012, at 11:38 AM, Paul Tanner <> wrote:
> This idea that socialist/capitalist Norway is as rich as they are only
> because they "have lots more oil and gas than we do" is just yet
> another myth made up by conservatives to try to explain away how
> economic conservatism is being proved by the facts to be all wrong.

Message was edited by: Paul A. Tanner III

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