[anoncake]

There is no evidence for that. Markets don't randomly stop working because you tax people – they would be quite useless tools if they were that fragile.

> Generally interfering with social processes through top-down cookie cutter measures leads to negative unintended consequences, because the rationale behind said intervention is based on an overly simplistic understanding of a highly complex system.

If my understanding of the system seems highly simplistic, it may be because I wrote an HN comment two sentences long as opposed to a book.

[CryptoPunk]

There is plenty of evidence for that, that economists have documented for nearly a century.

For example, there is a very strong negative correlation between government spending, as a percentage of GDP, and economic growth:

https://web.archive.org/web/20170821004405/http://ime.bg/upl...

And no markets will not "stop working". They'll work less effectively.

>>If my understanding of the system seems highly simplistic, it may be because I wrote an HN comment two sentences long as opposed to a book.

Every one's understanding of nation/global scale systems is overly simplistic, which is why it's impossible to predict what the market will do. In the absence of near-perfect knowedge, it's better to not interfere with spontaneously emergent bottom-up phenomena, like prices, or the market, via far-reaching cookie cutter rules.

EDIT:

With respect to below, I can't respond with a new comment due to comment rate-limiting, so I'll respond here:

It's not an opinion. They show the data, from 81 countries, over a span of decades, and show a pervasive correlation. The evidence speaks for itself.

This liberal think tank was instituted in a country that experienced 50 years of central economic planning, based on economically illiterate left-wing conspiracy-theories/economic-fallacies, so maybe they have legitimate cause to promote markets.

But go ahead and look down on them with your snarky derision.

>>Not really? There are other countries than the US which have had a significantly larger government (as well as higher taxes), or so called mixed-economies, that did just fine or even great?

Which countries? The data shows a strong negative correlation between government size and economic growth, within a dataset of 81 countries.

Look at Europe: the rise of social welfare spending as a percentage of GDP since the mid 1960s corresponded with stagnation in productivity and wage growth, just like occurred in the US.

>>As a side point, there's a discussion to be had regarding economic growth and GDP.

Per capita GDP growth, i.e. rising productivity, is the primary cause of improvements in quality of life. If ever you've lived in a country with low per capita GDP, and seen how ordinary people have to struggle so much more to afford to meet basic needs, you'd see why.

It's absolutely not the only factor impacting quality of life, it's true. GDP statistics are also not a perfect measure of productivity. But it's a very very good measure, of a very important contributor to quality of life, and if a particular way of organizing an economy is associated with this measure increasing at a slower rate, that is extremely important.

Economic growth rates, over longer periods of time, have a massive impact, because they have an exponential effect. A country with a per capita GDP growth rate of 4% will see double the income growth of a country with a per capita GDP growth rate of 2%, after only 35 years.

EDIT 2:

>>Which countries would you pick yourself as counter-evidence?

Norway, but it discovered oil in the 1970s, and was one of the top oil exporters in the world for decades with a population of only 4.5 million.

But anecdotes are not as important as large datasets, and large datasets show a strong correlation between small government (relative to GDP) and high economic growth rates.

>>feigned care of the poor

It's always good to assume that the person you're interacting with might be debating in good faith, and know things you don't. But I agree with the rest of that statement: it's anecdotal, just like the counter-examples you're searching for.

>>A GDP growth of 2-3% per year is also deeply unsustainable, doubling the economy every few decades can't continue.

It is sustainable for many many decades to come given returns from rising efficiency, and harvesting resources outside of earth, which are several orders of magnitude more plentiful than resources available on Earth.

Your pessimistic outlook reminds me of this:

"It is only in the backward countries of the world that increased production is still an important object: in those most advanced, what is economically needed is a better distribution"

-John Stuart Mill, Principles of Political Economy, 1848, said at a time when the per capita GDP of the UK was the same as Kenya's today, i.e. 20X less.

[cloudfifty]

Update to your edit:

> Which countries?

Which countries would you pick yourself as counter-evidence?

> If ever you've lived in a country with low per capita GDP, and seen how ordinary people have to struggle so much more to afford to meet basic needs, you'd see why.

Alright, that just an anecdote with some added feigned care of the poor. It's already clear that this won't go anywhere.

> But it's a very very good measure

It's not, and that was acknowledged by even the "inventor" himself.

A GDP growth of 2-3% per year is also deeply unsustainable, doubling the economy every few decades can't continue.

Update 2:

> Norway

> But anecdotes are not as important as large datasets, and large datasets show a strong correlation between small government (relative to GDP) and high economic growth rates.

Hmm? A statement saying that a large government (and likely high taxes) inherently causes a bad outcome doesn't need a long-term graph to be falsified. Scandinavia is sufficient, even much of western Europe on top of that.

>>>feigned care of the poor

>> It's always good to assume that the person you're interacting with might be debating in good faith, and know things you don't.

Just saying that The Free Market believers aren't famous for their concern for the poor or inequality, so it sounds pretty false given both your link to "Institute for Market Economics" and your comment history:

> "the alliance between rent-seeking labor unions and the Democratic Party"

> "when the US was still a free market where people had a sacred right to freely contract."

> "How is the freedom to engage in profit-motived activity exploitation? The whole principle behind the free market is that all interactions have to be mutually voluntary in order to be legal."

The latter is the most obvious example of not caring for the outcomes of the Free Market on the poor.

[CryptoPunk]

>>Hmm? A statement saying that a large government (and likely high taxes) inherently causes a bad outcome doesn't need a long-term graph to be falsified. Scandinavia is sufficient, even much of western Europe on top of that.

The bad outcome is a country doing worse than they otherwise would have. You can never prove that happened, because you can't run the experiment twice, so you try to find evidence to make a reasonable case for/against it, as the next best thing.

One way to do that is to look at large datasets, to see what the general effect of the policy seems to be when the experiment is run multiple times on varying countries. The size of the dataset helps to minimize the impact of other factors, given that those factors should average out as the dataset gets larger, thus hopefully exposing the impact of the factor under study.

In any case, Scandinavian countries saw stagnation in their rate of wage/economic growth after adopting social democracy, so they are not a counter-example.

The reason Scandinavia and more generally, Western Europe, are prosperous today is because they were the most free-market-based economies in the world for the longest period of time. Their lead over the rest of the world has shrunk since the 1960s, when they started to massively deviate from their adherence to the free-market rule set.

>>Just saying that The Free Market believers aren't famous for their concern for the poor

That characterization is nothing more than an effective smear job by rent-seeking insiders that depend on the state's suppression of people's private property and contracting rights for their privileges - like unionized workers - and left-wing populists.

>>The latter is the most obvious example of not caring for the outcomes of the Free Market on the poor.

You assume that because you assume profit-motivated activity, free markets, contract rights, and opposition to the Democratic Party, are all harmful to the poor. This assumption is deeply mistaken.

EDIT:

Responding to below:

I throw that advice back at you.

Sweden is typical of Scandinavia. Sweden had the third highest per capita GDP in the world in 1968. By 1991, after two decades of rapidly expanding social welfare programs, it had fallen to 17th in the rankings:

http://iea.org.uk/sites/default/files/publications/files/San...

Until the 1960s, Sweden had both been one of the most free market economies in the world, and most rapidly growing economies in the world, for around a century.

[cloudfifty]

You seriously need to read up on Scandinavian economic history, because you have it exactly backwards and this isn't even something that is disputed.

Update:

> I throw that advice back at you.

You're wildly extrapolating using the already established bad measurement of GDP. Do you believe that social democracies primary concern is increasing GDP per capita? Have the living standards been significantly worse in Scandinavia? No, the opposite.

Economic growth is not an end in itself, it's also not an indication for how well off he people in Scandinavia are compared to others. It's indisputable that the average Scandinavian citizen has enjoyed very high living standard for the last 80 years or so. Even with very large public sector and high taxes. This blatantly disproves the notion that this is not possible as you suggested above.

[CryptoPunk]

>>You're wildly extrapolating using the already established bad measurement of GDP.

GDP is not a bad measure..

I think you're getting overly emotional, and not assessing my points rationally. For example, these counter-examples are not on-point:

>>Do you believe that social democracies primary concern is increasing GDP per capita?

I already argued why they should be: increases in per capita productivity are the primary source of improvements in quality of life.

For example, the reason the Scandinavian region had the highest quality of life in the world by the 1960s, when it had yet to create expansive social programs, is that in the preceding century, it had been the fastest growing economy in the world, with the most free market policies:

http://iea.org.uk/sites/default/files/publications/files/San...

• Scandinavia is often cited as having high life expectancy and good health outcomes in areas such as infant mortality. Again, this predates the expansion of the welfare state. In 1960, Norway had the highest life expectancy in the OECD, followed by Sweden, Iceland and Denmark in third, fourth and fifth positions. By 2005, the gap in life expectancy between Scandinavian countries and both the UK and the US had shrunk considerably. Iceland, with a moderately sized welfare sector, has over time outpaced the four major Scandinavian countries in terms of life expectancy and infant mortality.

• Scandinavia’s more equal societies also developed well before the welfare states expanded. Income inequality reduced dramatically during the last three decades of the 19th century and during the first half of the 20th century. Indeed, most of the shift towards greater equality happened before the introduction of a large public sector and high taxes.

Hong Kong and Singapore, the two most free market jurisdictions in the world over the last several decades, have caught up to and surpassed Scandinavia in key measures of quality of life, like life expectancy, despite being far behind them in 1960.

Economic development is the primary source of quality of life gains.

>>Have the living standards been significantly worse in Scandinavia? No, the opposite.

Absolute strawman, that really shows no grasp of what my argument is.

>>It's indisputable that the average Scandinavian citizen has enjoyed very high living standard for the last 80 years or so. Even with very large public sector and high taxes. This blatantly disproves the notion that this is not possible as you suggested above.

I never said it is not possible, so that is a strawman. I said that the rate at which the economy, and with it, quality of life, improves, slows down with marginal increases in the suppression of market rights via top-down regulatory impositions and taxes.

And once again, this is demonstrated by the fact that the more free-market based Hong Kong and Singapore closed a massive economic and quality of life gap with Scandinavian countries since the 1960s, and even surpassed them in some metrics, like life expectancy.

[cloudfifty]

> The evidence speaks for itself.

Not really? There are other countries than the US which have had a significantly larger government (as well as higher taxes), or so called mixed-economies, that did just fine or even great?

It seems rather bad faith to omit such glaring examples when trying to prove a point.

As a side point, there's a discussion to be had regarding economic growth and GDP. Those measurements don't measure the well-being of a society, just economic activity. So we have countries with much lower GDP per capita but much also happier.

[anoncake]

Yeah I really don't care what some liberal think tank "thinks". And I'm not going to have this ideological discussion here, it never works out.