"The welfare of humanity is always the alibi of tyrants" - Albert Camus

Wednesday, April 6, 2011

Blog War: Response to Factoseintolerant's April 6th Comment

I have to respond to your comment countering my response to Persuit of Happyness on my blog as the post drags on a bit. It is probably a good idea to respond to each other as blog posts on our own blogs rather than as comments to the post since they tend to be long. Just leave a comment that you posted a response on your blog.

factoseintolerant responded to:

“but you may as well show North Korea and Cuba as examples (where everyone is dirt poor, so there is almost perfect income equality)”

I think that North Korea and Cuba are not at all examples of income equality. Yes, the majority of people make the same, very low, wage, but income equality is the relation between those at the 20th percentile and the 80th percentile, which would show income inequality in the countries you named.I disagree with your first paragraph because you say "income equality is the relation between those at the 20th percentile and the 80th percentile, which would show income inequality in the countries you named".

My response:

I defy you to show that 20% of the populations in N. Korea or Cuba are wealthy. Only the leaders are, with a handful of political ruling class being 'comfortable' by those countries' standards. Your assertion of top so many percentage being wealthy applies to the U.S., western Europe, or developing countries, not collectivist regimes or dirt poor countries where the 'wealthy' constitute a tiny, tiny fraction of 1% (few people out of millions). Now that is income equality (as close as one can get to it) since you will never find a dictatorship or a collectivist regime without even single 'well off' leader/politico.


factoseintolerant responded to:

“by U.S. standards, it (Denmark) is inferior without question”

I think you’re confused about what it is that I would like. You cite their standard of living, yet I hate our standard of living here, I don’t understand why we need 5,000 square foot homes, etc. I would rather everyone’s standard of living was at a level where everyone can live, rather than many living in poverty and the rest living in luxury. The reason their corruption is so low is probably because there are zero billionaires.
My response:

As to your second paragraph, are you lamenting the fact that if one chose to, he/she can live in a 5,000 or even 25,000 sq.ft. home, or become a billionaire? What does that ability to accumulate wealth have to do with "many living in poverty and the rest living in luxury"?

Let me answer my own question: It is because progressives see the economic pie as a finite one. They think if one has accumulated great wealth, that means others have had to be impoverished - a zero-sum game. They are incapable of seeing that wealth creation pulls others out of poverty. Here are some interesting questions for you to answer:

When was the last time you saw a poor person, or a middle class person for that matter, create a single job for the poor? Do you honestly think that total wealth in early or mid 1900s and today are the same in the U.S.? And for that matter, how do you explain expansion in wealth throughout decades for all income levels?  In order to create wealth, isn't an economic activity that generally speaking requires expanding the labor force necessary? Why did the 1983-2008 era create 49 million jobs (a 55% increase in total non-farm payrolls) - more jobs created than in the entire euro-zone? What are the dynamics of wealth creation?

Ooops, I said another dirty word: dynamics. Dynamic anything is a taboo for progressives; such as dynamic analysis. Everything, including wealth creation, is a static process in the progressive book.

Most billionaires, like Gates, Buffet, etc. (regardless of their politics) are interested in furthering the human condition. If it wasn't, why would they give so much to charity (over $40 billion of his wealth in the case of Gates)? Where is the supposed greed if they donate millions and billions to charities? That is more than just shielding your income from taxes. Enough with pointless class warfare.

Talking about charity, isn't it funny that the Americans are far more charitable than any other nationality? Do you believe in private charity or does it only count for you when a central government confiscates wealth (thus killing jobs ad opportunity) and doling out welfare?

Lots of questions to reflect on, provided some critical thinking goes in to the process to tie all the answers together in a logical manner.

factoseintolerant responded to:
“They are not ranked first but rather 17th”

The last article I could find, from Forbes in 2009, found the best business climate to be Denmark. Who decided it was 17th? I Added a link on my original post (Forbes even CITES it’s environmental policies).

My response:

I am sorry, my mistake (looked up the wrong number). Overall 2010/2011 ranking by the World Bank was 6th, however they ranked quite a bit lower in critical categories of starting a business (27th), enforcing contracts (30th), etc. See the link for info.

Here are relevant taxation related stats for Denmark:

Corporate rate: 25% (10% lower than U.S. - as we have the highest rate in the developped world: this is the only plus other than lack of corruption)

Individual rates: 37-59%

Payroll tax: 8%

VAT: 25% (on top of other taxes - non-deductible from state taxes)

Regional healthcare tax: 8%

Max cannot exceed: 51.5% (excluding VAT)

Sounds like a business haven, right, huh? Based onreasonable corporate tax rate and non-corruption - yes. Well, lets just see. Here is a very recent study by Danish scholars on job creation in Denmark based on data between 1980 and 2007.

Well, lookie lookie here. Some highlights include factoids like many younger firms do not have much longevity in Denmark. Only 20% of the firms are younger than 15 years old whereas the figure in the U.S. is 35%. Authors of the study therefore conclude that job destruction occurs mainly within the younger companies. "The small number of young firms surviving long enough to create employment seems to be the real weak point in Denmark" (page 21).

Net growth of jobs during that period: 19% - pretty anemic.

Before you jump all over it, yes, historically they've had relatively low unemployment rates, but consider the size of the economy (small)

Why I wonder, as the authors of the study avoid speculation on the reasons behind the phenomena? Could that be because of lack of consumer purchasing power? Id say bingo! Larger, more export oriented firms seem to fare better. So, exactly who does a policy of high taxation to support the welfare state benefit? Mainly those who are recieving generous welfare benefits. On the other hand, if you want to start a new small business, the odds are stacked against you. How uplifting!

Things aren't so bright in your favorite social democracy afterall, are they? Hmm, "something is rotten in Denmark" (just had to say that, disregard it).

While you may still prefer Denmark (one of the relative success stories in Europe), I'll take the U.S. with its usually dynamic (that is if progressive policies do not kill the goose that used to lay the golden egg) economy any day.


factoseintolerant responded to:

“Sweden (another highly progressive/socialistic state), they have some of the world’s worst stats for mental depression”

The majority of people in Sweden are happy, a prevalence of mental illness is a weak argument at best (especially with someone so willing to point to genetics for just unhappiness). In fact they are the fourth happiest country. Once again, I added a link on my post to the Gallup Poll results.

My response:

I am not going to insist much on this one. The clinical depression that is prevelant in Nordic countries has to do with their climates (long winters) more than anything else.

The Gallup Poll reflected on respondent's a) overall satisfaction with their lives, and b) how each subject had felt the previous day. However, it is not necesarily an indication of their great life style either (Panama and Turkmenistan were in top 20). Human beings get used to their life styles. True, life is not such a rat race in places like Nordic countries compared to the U.S., but they lack one critical ingredient for true happiness (a subjective thing, obviously) that can occur only when a person is free to express oneself in a manner of one's own choosing and has the power to do as he pleases. When your economic conditions don't permit it or your private property rights are violated as a matter of course due to welfare state policies, your liberties have been compromised, and that (at least to us) is unthinkable.  People have a god given right to pursue whatever makes them happy without trampling on others' rights.

I admit I made a poor point on that one.  I gotta take my time with these posts,

P.S. I could have left his last response out but if I did not admit to a poor point, what would be the use of this exercise we have undertaken.

1 comment:

factoseintolerant said...

I have not forgotten to reply, but it has been a busy week for school; I will reply as soon as I find the time. Although we are in no time crunch.