Is socialism bad for the economy?

[nygreenguy]

Norway is also full of entrepreneurs like Wiggo Dalmo. Rates of start-up creation here are among the highest in the developed world, and Norway has more entrepreneurs per capita than the United States, according to the latest report by the Global Entrepreneurship Monitor, a Boston-based research consortium. A 2010 study released by the U.S. Small Business Administration reported a similar result: Although America remains near the top of the world in terms of entrepreneurial aspirations -- that is, the percentage of people who want to start new things—in terms of actual start-up activity, our country has fallen behind not just Norway but also Canada, Denmark, and Switzerland.

But there is precious little evidence to suggest that our low taxes have done much for entrepreneurs—or even for the economy as a whole. "It's actually quite hard to say how tax policy affects the economy," says Joel Slemrod, a University of Michigan professor who served on the Council of Economic Advisers under Ronald Reagan. Slemrod says there is no statistical evidence to prove that low taxes result in economic prosperity. Some of the most prosperous countries—for instance, Denmark, Sweden, Belgium, and, yes, Norway—also have some of the highest taxes. Norway, which in 2009 had the world's highest per-capita income, avoided the brunt of the financial crisis: From 2006 to 2009, its economy grew nearly 3 percent. The American economy grew less than one-tenth of a percent during the same period. Meanwhile, countries with some of the lowest taxes in Europe, like Ireland, Iceland, and Estonia, have suffered profoundly. The first two nearly went bankrupt; Estonia, the darling of antitax groups like the Cato Institute, currently has an unemployment rate of 16 percent. Its economy shrank 14 percent in 2009.

Moreover, the typical arguments peddled by business groups and in the editorial pages of The Wall Street Journal— the idea, for instance, that George W. Bush's tax cuts in 2001 and 2003 created economic growth—are problematic. The unemployment rate rose following the passage of both tax-cut packages, and economic growth during Bush's eight years in office badly lagged growth during the Clinton presidency, before the tax cuts were passed.

And so the case of Norway—one of the most entrepreneurial, most heavily taxed countries in the world—should give us pause. What if we have been wrong about taxes? What if tax cuts are nothing like weapons or textbooks? What if they don't matter as much as we think they do?

But it takes more than perks to keep a worker motivated in Norway. In a country with low unemployment and generous unemployment benefits, a worker's threat to quit is more credible than it is in the United States, giving workers more leverage over employers. And though Norway makes it easy to lay off workers in cases of economic hardship, firing an employee for cause typically takes months, and employers generally end up paying at least three months' severance. "You have to be a much more democratic manager," says Bjørn Holte, founder and CEO of bMenu, an Oslo-based start-up that makes mobile versions of websites. Holte pays himself $125,000 a year. His lowest-paid employee makes more than $60,000. "You can't just treat them like machines," he says. "If you do, they'll be gone."
http://www.inc.com/magazine/20110201/in ... alism.html

A good article and I am curious as to what others think about this any the many nuggets within it.

[East of Eden]

So was Argentina. Then we had a terrible dictatorship (who kept the economic system capitalist), and now we're in terrible shape. Again, the issue in Latin America is the corrupt dictators, or even the corrupt elected (or sometimes "elected") officials, the economic systems don't show much contrast in our case.

Just curious, what in your opinion is wrong with Argentina and what is the fix?

In the human rights aspect, Cuba is a mess. Their government is suspected of and in my opinion guilty of crimes against humanity and individual freedoms are heavily restricted. How does this relate to the economic system?

Economic freedom generall corelates with political freedom. As the economist Thomas Sowell put it:

"The question becomes, are you going to have everyone play by the same rules, or are you going to try to rectify the shortcomings, errors and failures of the entire cosmos? Because those things are wholly incompatible. If you're going to have people play by the same rules, that can be enforced with a minimum amount of interference with people's freedom. But if you're going to try to make the entire cosmos right and just, somebody has got to have an awful lot of power to impose what they think is right on an awful lot of other people. What we've seen, particularly in the 20th century, is that putting that much power in anyone's hands is enormously dangerous."

That is certainly true of Cuba.

[whyhate]

Socialism is bad for the economy when you try to help everybody.

[Wyvern]

Economic freedom generall corelates with political freedom. As the economist Thomas Sowell put it:

"The question becomes, are you going to have everyone play by the same rules, or are you going to try to rectify the shortcomings, errors and failures of the entire cosmos? Because those things are wholly incompatible. If you're going to have people play by the same rules, that can be enforced with a minimum amount of interference with people's freedom. But if you're going to try to make the entire cosmos right and just, somebody has got to have an awful lot of power to impose what they think is right on an awful lot of other people. What we've seen, particularly in the 20th century, is that putting that much power in anyone's hands is enormously dangerous."

That is certainly true of Cuba.

Looking back at the 20th century I'd say this is much more true of the US.

[Grumpy]

whyhate

Socialism is bad for the economy when you try to help everybody.

Too much socialism is bad for the economy, too little socialism is bad for the people. Seeking the right balance is called civilization.

Grumpy

[East of Eden]

Economic freedom generall corelates with political freedom. As the economist Thomas Sowell put it:

"The question becomes, are you going to have everyone play by the same rules, or are you going to try to rectify the shortcomings, errors and failures of the entire cosmos? Because those things are wholly incompatible. If you're going to have people play by the same rules, that can be enforced with a minimum amount of interference with people's freedom. But if you're going to try to make the entire cosmos right and just, somebody has got to have an awful lot of power to impose what they think is right on an awful lot of other people. What we've seen, particularly in the 20th century, is that putting that much power in anyone's hands is enormously dangerous."

That is certainly true of Cuba.

Looking back at the 20th century I'd say this is much more true of the US.

Where is the US equivalent of this list of Cuban human rights violations?

http://www2.fiu.edu/~fcf/humrts.html

[Wyvern]

Economic freedom generall corelates with political freedom. As the economist Thomas Sowell put it:

"The question becomes, are you going to have everyone play by the same rules, or are you going to try to rectify the shortcomings, errors and failures of the entire cosmos? Because those things are wholly incompatible. If you're going to have people play by the same rules, that can be enforced with a minimum amount of interference with people's freedom. But if you're going to try to make the entire cosmos right and just, somebody has got to have an awful lot of power to impose what they think is right on an awful lot of other people. What we've seen, particularly in the 20th century, is that putting that much power in anyone's hands is enormously dangerous."

That is certainly true of Cuba.

Looking back at the 20th century I'd say this is much more true of the US.

Where is the US equivalent of this list of Cuban human rights violations?

http://www2.fiu.edu/~fcf/humrts.html

What does human rights violations have to do with Sowell's quote? I think even you would agree that it was the US not Cuba that tried to,"make the entire cosmos right and just". Cuba was nothing more than Soviet puppets. The US on the other hand during the twentieth century and especially during the cold war had either replaced or attempted to replace many countries rulers.

[East of Eden]

Economic freedom generall corelates with political freedom. As the economist Thomas Sowell put it:

"The question becomes, are you going to have everyone play by the same rules, or are you going to try to rectify the shortcomings, errors and failures of the entire cosmos? Because those things are wholly incompatible. If you're going to have people play by the same rules, that can be enforced with a minimum amount of interference with people's freedom. But if you're going to try to make the entire cosmos right and just, somebody has got to have an awful lot of power to impose what they think is right on an awful lot of other people. What we've seen, particularly in the 20th century, is that putting that much power in anyone's hands is enormously dangerous."

That is certainly true of Cuba.

Looking back at the 20th century I'd say this is much more true of the US.

Where is the US equivalent of this list of Cuban human rights violations?

http://www2.fiu.edu/~fcf/humrts.html

What does human rights violations have to do with Sowell's quote?

Because as Sowell says, to implement these socialist ideas, you have to have the power to force the recalcitrant to get with the program. I am speaking here of Cuba, and realize Europeans may want their milder form of socialism.

I think even you would agree that it was the US not Cuba that tried to,"make the entire cosmos right and just". Cuba was nothing more than Soviet puppets. The US on the other hand during the twentieth century and especially during the cold war had either replaced or attempted to replace many countries rulers.

If only we had been able to do so with Castro.

[Lux]

Just curious, what in your opinion is wrong with Argentina and what is the fix?

There are several serious problems with Argentina, the vast majority of them are socioeconomic. I'll try to be brief, but I could talk about this all day.

The level of poverty is through the roof, inadmissible for a country with so many natural resources, the entire public system is in terrible shape and declining, especially education. Most of the problems are a direct result of a long string of corrupt or inefficient governments. The solution, in my opinion, is to invest more in job creation and education. Educated people wouldn't choose government like the ones we've had for the past decades, which basically were based in the "Bread and circuses" metaphor. Sadly, our education system is a joke, and kids coming from a family with unemployed parents are very unlikely to get past primary school.

In case you're curious, there's only one serious socialist presidential candidate in Argentina, and no, I'm not voting for him

Economic freedom generall corelates with political freedom.

Even if that is true, correlation doesn't mean causation. Cuba's problems are due to a repressive and corrupt government, not to their economic system. Unless you can point to major flaws in the economy of Cuba that are due to socialism rather than their limited natural resources, Cuba is not a good case against socialism.

[East of Eden]

Just curious, what in your opinion is wrong with Argentina and what is the fix?

There are several serious problems with Argentina, the vast majority of them are socioeconomic. I'll try to be brief, but I could talk about this all day.

The level of poverty is through the roof, inadmissible for a country with so many natural resources, the entire public system is in terrible shape and declining, especially education. Most of the problems are a direct result of a long string of corrupt or inefficient governments. The solution, in my opinion, is to invest more in job creation and education. Educated people wouldn't choose government like the ones we've had for the past decades, which basically were based in the "Bread and circuses" metaphor. Sadly, our education system is a joke, and kids coming from a family with unemployed parents are very unlikely to get past primary school.

In case you're curious, there's only one serious socialist presidential candidate in Argentina, and no, I'm not voting for him

Economic freedom generall corelates with political freedom.

Even if that is true, correlation doesn't mean causation. Cuba's problems are due to a repressive and corrupt government, not to their economic system. Unless you can point to major flaws in the economy of Cuba that are due to socialism rather than their limited natural resources, Cuba is not a good case against socialism.

Cuba was one of the most prosperous nations in Latin America prior to Castro and socialism. My father and grandfather visited there often.

http://www2.fiu.edu/~fcf/cubaprecastro21698.html

What natural resources does Hong Kong have?

[Lux]

Cuba was one of the most prosperous nations in Latin America prior to Castro and socialism. My father and grandfather visited there often.

http://www2.fiu.edu/~fcf/cubaprecastro21698.html

Cuba is one of the most prosperous nations in Latin America, and possibly the most prosperous free nation among the Antilles. Considering their scarce natural resources, I think that's very worth noting. Economy of Cuba.

According to that article, a third of the population of Cuba lived in poverty prior to the Revolution. That doesn't sound too prosperous to me, it sounds like the story of every Latinamerican country: a small and very wealthy high class, supported by extremely spread poverty, and millions living under inhuman conditions. Poverty in Latin America is worse than it is in the States, not just in numbers, but also in quality of life. The situation in Cuba prior to socialism was very serious, and while I agree with you that Cuba has huge social and political problems that need to be fixed, I disagree that it can be used as an example of failed socialism.