Socialism (new challenger)

Opening arguments:As con I will be arguing against the economic system of socialism, and in favor of the economic system of capitalism. Such elements of a capitalist system include-Private property rights-Business competition-Little to no government regulations-Little to no taxation-No welfare to individuals or corporations-A very decentralized banking system-Free trade-Investment freedom#1. Economic liberalization promotes economic growth:Economic liberalization (aka Capitalism or a Free Market) has been proven to promote economic growth and prosperity. For example, a study conducted by Swedish economists states:"The most recent studies find a significant negative correlation [between government size and growth]: An increase in government size [measured as gov spending as a % of GDP] by 10 percentage points is associated with a 0.5 to 1 percent lower annual growth rate" the research is rather close to a consensus: the correlation is negative and the sign seems not to be an unintended consequence of reverse causality in the sense that government generally expands during economic downturns" (1). Other studies have found that increase in government size (measured as gov spending as a % of GDP) leads to negative trends in employment rates (2)(3). Economists from the University of Delaware used data from 20 OECD countries over three decades and examined how government spending as a share of GDP affects the unemployment rate (when accounting for other relevant factors). Their findings conclude:"We find that increases in government outlays hamper economic growth and raise the unemployment rate. Moreover, different types of government outlays are found to have different effects on growth and unemployment, with transfers and subsidies having a larger effect than government purchases. In addition, Granger causality tests suggest unidirectional causation from government outlays to economic growth and the unemployment rate" (4). Research also finds that "on average, creation of 100 public jobs may have eliminated about 150 private sector jobs, slightly decreased labour market participation, and increased by about 33 the number of unemployed workers" (5). Studies have also shown that countries with higher taxes face slower economic growth (6)(7). Research has concluded that, "Corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption taxes. Recurrent taxes on immovable property appear to have the least impact. A revenue neutral growth-oriented tax reform would, therefore, be to shift part of the revenue base from income taxes to less distortive taxes such as recurrent taxes on immovable property or consumption" (8). #2. Free markets and air pollution:Recent research conducted for the Fraser Institute examined data from over 100 countries which spanned the course of a decade. After controlling for the effects of income, political freedom, and other confounding variables, they found a robust negative effect of economic freedom on air pollution (defined as the concentration of fine particle matter in the air) (9). #3. Capitalism and happiness:A number of studies find that economic freedom makes people happier, for example, results from a study based on data from 86 countries over the 1990"2005 period suggest that overall economic freedom has a significant positive effect on subjective well-being (10). Another study finds that, "Economic freedom, therefore, not only makes people richer, but it also makes them happier" (11). Other research has come to similar conclusions (12). #4. Capitalism and Education: According to a review of over 60 studies on the matter:"In more than 150 statistical comparison covering eight different educational outcomes, the private sector outperforms the public sector in the overwhelming majority of cases. Moreover, this margin of superiority is greatest when the freest and most market-like private schools are compared to the least open and least competitive government systems (like those in the U. S)" (13). The evidence overwhelmingly supports the belief that a free market in education would foster greater educational outcomes:"Twelve empirical studies have examined academic outcomes for school choice participants using random assignment, the "gold standard" of social science. Of these, 11 find that choice improves student outcomes"six that all students benefit and five that some benefit and some are not affected. One study finds no visible impact. No empirical study has found a negative impact" (14). #5. Comparison of economic systems around the globe:Many supporters of a socialist economic system typically look to the European model. This is known as the Nordic Model. These countries are seemed to be used as proof that socialism actually works. It"s worth noting that the Nordic model, or Nordic capitalism, combines a large welfare state with free market policies such as openness to trade, minimal regulation, etc. In fact, the Scandinavian countries are far from socialist, they rank among the top on the Fraser Institute"s Economic Freedom of the World Index (15). Here are their rankings:Denmark: 14th freest market economy in the world (out of 152 countries measured)Finland: 7th freest market economyIceland: 41st freest market economySweden: 29th freest market economyNorway: 31st freest market economyFor comparison, the United States: 17th freest market economyFor comparison, China: 123rd freest market economy (not free and not exactly a market economy) While it is true that the Scandinavian countries have large tax burdens, and it is true that these countries experienced rapid growth in the 1990"s, it is not true that they are proof that a large tax burden does not harm economic growth. In fact, in order to examine how taxes affect economic growth, it is necessary to account for other factors which affect economic growth as well. For example, openness to trade, the size of the economy in question, inflation, and other factors all affect economic growth. If we don"t take these confounding factors into account the correlation is meaningless, as is the claim that Scandinavian countries are proof that taxes don"t harm growth. Also, high levels of social trust are found to increase economic growth significantly, and the Scandinavian countries have some of the highest levels of social trust among developed countries (16). Research also finds that countries with higher levels of social trust also have lower business and credit market regulations. While many supporters of socialism see Denmark as a country with their ideal tax structure (extremely high rates), Danish economists actually think the U. S is the model to follow. According a study by Danish economists:"Our results indicate that along the intensive margin the Danish taxation generates an overall efficiency loss corresponding to a 12 percent reduction in total income. It is possible to reap 4/5 of this potential efficiency gain by going from a high-tax Scandinavian system to a level of taxation in line with low-tax OECD countries such as the United States. " (17). Due to lack of room on my character count, I will put my sources in the comment section.