July 14, 2019 - Freedomain Radio - Stefan Molyneux
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| Welcome to my show Hi everybody, it's Stefan Molyneux from Freedom Aid Radio. | |
| I hope you're doing well. So this is a general overview of one of the challenges of modern economic thought, which is the idea that socialism works really, really well, say, in the Scandinavian countries. | |
| You'll hear this quite a bit when you talk about the value of a free market and voluntarism and all that kind of good stuff. | |
| So let's look at some of the perspectives and history about this free market slash socialist miracle known as the Scandinavian Group of Countries. | |
| So, of course, libertarian free markets, we condemn socialism as immoral and inefficient in that it relies on the initiation of force in the form of taxation and the debt slavery of national debts and fiat currency control and so on. | |
| And then we say, ah, we hear back, what about the success of high tax, big wealth for social democratic states like those in Scandinavia? | |
| Aha! Bullseye to your bad argument. | |
| But let's look at the facts. | |
| So in reality, the wealth of these countries is highly correlated with their economic freedom and not the growth and implementation of socialist policies, which actually represent a significant undertow on their wealth generation. | |
| And these supposedly socialist states are some of the most economically free states in the world, and we'll look at that. | |
| And the Scandinavian stereotype that they enjoy the highest standards of living in the world is actually quite false, and it's just not true at all. | |
| So let's look at public spending and wealth growth. | |
| This is OECD countries from 1960 to 1996. | |
| Size of government as a percentage of GDP It's very, very important. | |
| And on the left hand, you can see the yearly growth rate. | |
| So where governments are less than 25% of gross domestic products, you see a growth rate of 6.6%, 25 to 29%, 4.7%, 30 to 39% of the economy swallowed up by the government, 3.8%, 2.8 to 1.6. | |
| This is a very, very clear correlation. | |
| Now, you can't do much of anything without growth in your economy. | |
| In terms of wealth generation or paying for social programs or anything like that. | |
| So the smaller the size of the government, the greater the wealth growth in the country. | |
| This is one of the reasons why free market economists, free market thinkers like myself say that it's really important to have a smaller slash none of the government size. | |
| So, of course, it makes a huge difference in your standard of living. | |
| Nations in the top quartile of economic freedom had an average per capita GDP of over $37,000 in 2010, compared to just over $5,000 for the bottom quartile nations in 2010, current international So the size of the government, the degree of coercion in the economy is directly correlated to, I mean, staggering differences in wealth. | |
| And this is why it's a little bothersome for free market advocates to be told that we don't care about the poor. | |
| We do care about the poor. | |
| We just care about the poor morally and in terms of actual numbers rather than listening to the syrupy platitudes. | |
| of sociopathic politicians. | |
| We look at the facts of what actually helps the poor rather than what is claimed to help the poor through self-interested status bureaucracies. | |
| In the top quartile, the average income of the poorest 10% was over $11,000 compared to just over $1,200 in the bottom quartile. | |
| So even the poorest are 10 times better off when the government is smaller. | |
| Do you see where we're coming from? | |
| I hope so. And boy, it's almost 20 years extra of bonus life. | |
| In the top quartile, almost 80 years is the life expectancy. | |
| In the bottom, just over 60 years. | |
| So having a big government is a 20-year death sentence and the poor die ridiculously young and even the middle class and rich die proportionately young when the government is larger. | |
| So it keeps people poor and kills them early. | |
| A large government is a toxic agency in the human environment. | |
| It is a virus. It is a cloud of carcinogen. | |
| It is a toxic radiated substance. | |
| Wealth is correlated with smaller government because smaller government is correlated with more freedom, right? | |
| So when an economic transaction is not coerced, it is by definition win-win, right? | |
| If you go buy an iPad for 500 bucks, then clearly Apple wants your 500 bucks more than they want the iPad, and you want the iPad more than you want 500 bucks. | |
| It's completely win-win. The moment you introduce coercion into the interaction, then it is win-lose, and it is a net reduction in wealth and happiness and freedom and virtue. | |
| So if you look at a country like Sweden, do you think we found an exception to this trend? | |
| Well, not so much. | |
| So in the early 1950s, Sweden was one of the freest economies in the world, and government spending relative to GDP was below the American level, right? | |
| So America in the post-Second World War period is a pretty free market economy, which is why poverty was being reduced by one percentage point every single year, until the Great Society programs came in and stopped that trend, tragically. | |
| So you can't just look at the present if you look at the history of the country as well and see where it's coming from. | |
| Sweden had the highest per capita income growth in the world, in the world, between 1870 and 1950, by which time Sweden had become one of the world's richest countries, behind only the US and Switzerland and Denmark. | |
| Between 1870 and 1950, average growth in Swedish GDP and productivity was by some measures the fastest in the world. | |
| So when you're looking at the socialist policies, you have to remember that they're being built upon a mountain of free market gold developed over the previous, well, nearly century. | |
| So Nordic nations used to have competitive tax systems, so the star line here is the USA, which has remained somewhat lower from 1925 to the end of last century. | |
| And as you can see, up around 1950, 1960, they were very close, and then the tax systems in the Nordic nations got somewhat more problematic. | |
| It got higher. But prior to that, this was not the case, right? | |
| And so what's happened? Well, in Sweden, cumulative employment change, you can see from 1950 to 2005, I mean, government sector, which was pretty similar to the private sector in terms of employment change, went nuts. | |
| I mean, they just went on a hiring binge in the government and this bled off and declined private sector employment. | |
| And what this does, of course, is it makes it look like there's a higher standard of living, but as you get more workers into the government, Not only are they spending their time interfering with the operations of the free market, but you are setting yourself up for catastrophic losses in the future with your unfunded liabilities in terms of their pensions and healthcare when they get older. | |
| So, what's happened? | |
| Well, there's a declining GDP per person as a percentage of OECD average since 1950. | |
| So, since 1950, Swedish GDP per person was 20 points above the OECD average. | |
| And now it's down below 90, 95, staggering along there. | |
| So as the government has grown, the GDP has shrunk. | |
| And that, of course, is pretty tragic. | |
| You can pause this. | |
| Just for reference, this is a list of the OECD countries if you want to get an understanding of where they come from. | |
| So let's look at the corporate tax rates. | |
| So if you look at Denmark, Finland, Iceland, Norway, Sweden, they all have significantly lower corporate tax rates than the United States. | |
| And so that's quite important because, you know, as Mitt Romney tragically misinformed the public, he said corporations are people. | |
| They are, of course, there's no such thing as a corporation that you can tax. | |
| The tax has to come out of someone's pocket, tends to come out of the employee's pocket. | |
| And so Don't imagine that this is some socialist paradise. | |
| They have significantly greater free trade in certain areas and lower taxes in important areas such as corporate tax rates. | |
| Corporate income in the US, 39.3% and no higher than 28% in the Nordic nations. | |
| That's significant. So based upon five main criteria, size of government, legal system and property rights, sound money, freedom to trade internationally, regulation and so on, the Economic Freedom of the World Index ranked the social democratic Scandinavian countries very close to the US. And that's quite important, particularly when it comes to sound money. | |
| When you have an empire, when you have a military industrial complex and a prison industrial complex, and when you have this weird, mutant, fascist, semi-socialist with private profits and public spending system of healthcare, Then you have to get real kind of funky with your money, real funny with your money. And so overprinting money manipulation, interest rate manipulation is much higher in the U.S. than in these countries because the U.S. has to fund massive dependency and the military-industrial complex. | |
| So relative to the U.S., they're not actually less free significantly at all. | |
| So, again, you can pause this if you want, but you can look at the Economic Freedom of the World Index and see where these countries rank. | |
| See Switzerland is ahead of Australia, Canada, and so on. | |
| And so you can see where these countries rank. | |
| These didn't exactly come out right but you can sort of see where Denmark, US, Denmark and so on, Finland, Switzerland are all more economically free than the United States. | |
| And Norway is less economically free but Norway has a huge amount of oil and that of course offsets a lot of problems. | |
| So the World Bank's ease of doing business index which measures the amount of bureaucracy and regulation one has to put up with when starting and running a business in any given country And the Scandinavian countries score in the top 10s and 20s with Switzerland the highest at 28, just below Japan, higher than France and high above Italy, Spain and Greece. | |
| So they are very economically free relative to these other countries. | |
| And again, you can pause this. | |
| The links will be below. Sorry about the tiny font. | |
| But you can have a look at where these countries stand. | |
| But they stand quite well. | |
| And again, this is not a socialist model. | |
| So war, of course, is a form of socialism. | |
| It is welfare for the rich and evil. | |
| And Sweden, for instance, has taken the pacifist route relative. | |
| They've stayed out of wars. | |
| Sweden was able to stay out of World War I, World War II, and all other wars as well. | |
| It's the country with the longest consecutive period of peace, having fought no war since 1809. | |
| Does that allow you to accumulate some wealth? | |
| Well, of course. I mean, all of the wealth that was generated, almost down to the last pound, dollar, you name it, all of the wealth that was generated in the Industrial Revolution from 1815 to 1914 was destroyed in the First World War. | |
| A hundred years of economic progress. | |
| So you stay out of wars and you stay out of debtor's prison. | |
| Sweden has enjoyed five more years of peace than Switzerland, which participated in the Napoleonic Wars in 1814. | |
| Switzerland is the second oldest neutral country in the world, has not fought a foreign war since its neutrality was established by the Treaty of Paris. | |
| In 1815. So if you count war as being part of socialism, then you can really understand, of course, that these countries are less socialist in terms of empire than the U.S. is. | |
| So 2011, US is almost 5% military expenditures, percent of GDP, Norway 1.6, Sweden 1.3, Finland 1.5, Switzerland 0.9, Denmark 1.5. | |
| This is huge amounts of reductions in spending. | |
| And that, again, if you understand the military-industrial complex as a form of government power, socialism, fascism, you name it, then these countries are, you know, a quarter or a third less socialist than the US. Denmark has a very bad tax system, very high taxes, but very free market policies in other areas. | |
| It ranks number 15 out of 141 countries there. | |
| 113th for fiscal policy, but Denmark is the fifth best nation in the world for protecting property rights and maintaining a sound legal structure. | |
| It's the 11th best nation in the world for avoiding over-regulation of credit, labor, and business. | |
| It's the 24th best nation in the world for sound money, 25th best nation in the world for freedom to trade across borders, and ranks fourth among all nations when you combine these important measures of free market economy. | |
| It's surpassed only by Hong Kong, Singapore, and New Zealand. | |
| So that's very, very important. | |
| If you think they're socialist, then you've got to figure out why they're fourth in economic freedom in significant measures. | |
| Let's look at the living standards. | |
| Everyone says, oh, these people got massively high standards of living. | |
| Again, sorry about these tiny texts. | |
| You can pause it or look at the results below. | |
| But the United States has a much higher standard of living. | |
| This is from 2010. If you look down here, the U.S. is over 140 and some of the Finland is 100 and Denmark is just over 100. | |
| So the living standards are much higher in the U.S. relative to these other countries. | |
| Let's look at the income. Per capita GDP in the U.S. is more than 15% higher than in the Nordic nations. | |
| The average person in the Nordic nations has only 51% as much private consumption as an average American. | |
| Norwegians are the most prosperous, but even their private consumption levels are just 56% of US levels. | |
| Both the Swedes and the Finns have less than 50% of the private consumption of average Americans. | |
| So... It's not the wealthiest group of individuals in the world. | |
| So here's figure four. | |
| This is higher living standards in America. | |
| And so Norway, Denmark, Iceland, Sweden, Finland, compared to the U.S., as you can see, much, much lower considerably. | |
| So it has a price. | |
| It has a cost. Higher levels of disposable income in the United States compared to all these countries as well. | |
| So you have more money to spend, of course, in the U.S. Americans enjoy more output as well, more economic efficiency in terms of productivity, worker productivity, and so on. | |
| And the Nordic average is significantly lower than the United States average. | |
| And the Nordic nations consistently lag behind US economic output. | |
| As you can see here, the Nordic average from 1980 to 2006 is lagging. | |
| What's our net worth? | |
| Well, in the United States, the net worth of people is almost $100,000. | |
| Depending on how you measure it, you could also count it as a little under 80. | |
| Norway, almost too small to measure. | |
| You know, Finland, 30,000 and change. | |
| Sweden, 30,000 and change. | |
| So, you know, about a third net wealth relative to the United States. | |
| Now, to be fair, of course, the U.S. has to pay for health care privately for some people out of that relative to what is going on in these Nordic countries. | |
| So that's actually quite important to understand. | |
| So only oil-rich Norway has come close to matching U.S. per capita output for at least a decade. | |
| And so that's Quite important to understand as well. | |
| The U.S. is the dot there. | |
| It remains consistently high. | |
| That's the 100% one. Norway does better, but the other ones are significantly low in per capita output relative to the U.S. So I really appreciate you watching and listening. | |
| This is a very quick overview. | |
| I hope that this has at least given you some pause around the idea that these Scandinavian countries are socialist paradises and that This kind of social democracy model really works. | |
| They have, you know, up to around 40-50% of GDP as debt. | |
| This is a big problem. | |
| So, you know, they're in debt. | |
| They are lacking economically, even with their economic freedoms. | |
| It's not a model that really works very well. | |
| It certainly won't work in a long time. | |
| And they still have the momentum of past economic productivity when their economies were much more free. | |
| So check us out if you like at freedomainradio.com. | |
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