State Intervention Hinders Economic Growth

Rebuttals I and II I think you're scraping the bottom of the barrel a little by giving examples of preindustrial societies - Ancient Rome and Imperial Spain are completely different to societies today, as are their economies. There was no industry, no service sector, no electricity, etcetera; and the argument is largely irrelevant and inconsequential. I won’t defend statism in precapitalist societies either, since the majority of taxes were spent on foreign wars, building statues and expanding wine cellars rather than healthcare, social spending and infrastructure. III I never said that GDP was an invalid measurement; merely that it was not all-encompassing. All you proved with the quote about net capital investment was the fact that in the aftermath of a banking crisis and during a depression, private investment took a dive, which is hardly revelationary. I shall compensate by including other statistics from the periods 1920-1929 and 1933-1941 1920-1929 Yearly Average CPI Inflation - -1.73% Unskilled Wage Growth - -0.93% Production Worker Compensation Growth - -0.48% Nominal GDP Growth – 1.78% Real GDP Growth – 3.98% Nominal GDP per capita Growth – 0.26% Real GDP per capita Growth – 2.43% S&P Composite Index – 18.33% http://www.measuringworth.com... 1933-41 Yearly Average CPI Inflation – 1.61% Unskilled Wage Growth – 6.83% Production Worker Compensation Growth – 6.68% Nominal GDP Growth – 10.74% Real GDP Growth – 8.46% Nominal GDP per capita growth – 9.92% Real GDP per capita growth – 7.65% S&P Composite Index – 10.22% http://www.measuringworth.com... Also, your figures on consumer goods growth are superfluous as the introduction of Hire Purchase meant that a large number of the goods were not bought, as debt does not constitute a product; and also that demand dried up at the end of the decade as everybody that could afford (and many that could not) cars, radios and refrigerators had them. Demand did not increase until the 1940s, when industrial capacity had been expanded and cheaper goods could be made in greater quantities. There were also four recessions in the 1920s, more than even today’s supply side economics could muster. As with all free market ‘booms’, it led to massive regional and class disparities. Agricultural areas were hit by a fall in demand for American agricultural problems in Europe after the farmland in Eastern France and the Low Countries, the area most devastated by fighting and the most productive agricultural area in Europe had been repaired. This led to major hikes in production that damaged the topsoil in the newly cultivated areas and, when paired with a severe drought in the early 1930s, resulted in the Dust Bowl, which destroyed the Midwestern Economy almost irreparably (1). Income inequality spiked during the 1920s as well, with the top 1% of earners owning 19% of the US economy, compared with 8% in 1973 and 17% in 2005 (2). 60% of Americans earned less than $2,000 PA and 40% were below the poverty line (3).7 1) http://science.howstuffworks.com... 2) http://elsa.berkeley.edu... 3) http://www.johndclare.net... Reagan and Thatcher The increased military spending was effectively a corporate welfare project. Reagan was feeding the Military-Industrial Complex by pumping more and more money into the Pentagon, which meant huge contracts for defence companies. There being thirty thousand more millionaires only means that 0.12% of the population managed to earn more than a million dollars. I stand by the real wage statistics provided in R3 that show that despite lowered inflation, real wage growth has been negligible for the neoliberal period. Examples of Statism I – The GI Bill Soldiers’ returning from a major war has meant a glut on the labour force since the Napoleonic Wars. After WWI in the UK for example, there were 1.5 million people unemployed, almost entirely discharged soldiers from the army, which had 4,000,000 soldiers in 1918 and 370,000 in 1920. It would be correct to say that the lost generation of WWI also included the vast numbers of soldiers left to the mercy of market forces in the aftermath. After WWII however, the Servicemen’s Readjustment Act meant that returning soldiers were granted cheap credit, substantial cash payments, federal entitlements and places in higher education. This effectively renovated the American workforce, allowing families that had previously been working class to own their own homes, own their own businesses and live the American Dream. A huge portion of the American middle class can find its origins in the GI Bill. (Joseph E. Stiglitz – The Price of Inequality) II – The NHS Founded in 1948, the National Health Service in the UK is an example of statism at its finest. The state provided health care to all, free at the point of access, and ‘From the Cradle to the Grave’ as William Beveridge, the Liberal Party economist described it. If we take all industrialised countries, the USA is the only country to leave its healthcare provision to the market, and consequently spends twice as much on healthcare as the UK (1). In the World Health Organisation rankings of health systems, the UK ranked 18th and the USA 38th (2). Contrary to attacks from the American right, it also does not operate ‘death panels’ that euthanize the elderly and the terminally ill. It is more realistic to say that the only death panels that operate are hospitals seeking to profiteer rather than provide an essential service to citizens (3). (1) http://www.theguardian.com... (2) http://www.who.int... (3) http://www.telegraph.co.uk...