3 ms·

> The West is made up of countries that often have 40%+ of their economy made up by government spending, ie, spending that wouldn't happen under a free market.

by throwaway2037 3y ago

> The West is made up of countries that often have 40%+ of their economy made up by government spending, ie, spending that wouldn't happen under a free market. How about Japan, Korea, Taiwan, and Chile? What what is the "correct" percent to spend? And, what non-microstate countries do you consider "free market"? By the time you include: military, education, health, and infrastructure, it is very hard to be less than 25% for any highly developed nation.

roenxi 3y ago
> What what is the "correct" percent to spend? Quite an interesting question - theories range from 0% to 100% and everywhere in between. Empirical evidence seems to be that >60% causes a collapse of some sort [3] since nobody serious is doing that. And probably a floor of 20% since Singapore operates at 15% but doesn't really try to field a military and is a micronation. Anywhere at 40%+ seems to have problems with industrial production and innovation. I'd suggest there is a sweet spot at 20-30% spending on uneconomic projects, although obviously if that number can be reduced then more spending on uneconomic things means more stuff for everyone. If we look at the countries you suggest, we see 44% (Japan), 27% (South Korea), 16% (Taiwan), 26% (Chile). We see that GDP per capita improvement is worst in Japan [1, 2]. There is a bit of a link between high growth and low government spending. Of course, if a country is growing quickly and the government isn't spending much then government expenditure will appear low so we can't be certain it is causal - but we would suspect that fast growth isn't led by government spending. My personal theory is we see economies grow, then people kill the growth and coast. The high-taxing economies are lovely places to live for a while, but are getting crushed industrially and have generally managed to get themselves into an energy crisis which is starting to have an impact on living standards. Coasting is a bad long term plan. Until someone comes up with a number, we should at least experiment with zones of as close to 0% taxation and spending as can be managed without compromising the consensus essential services. That is the sort of thing China looked to be doing in Shenzhen and it worked wonders. [0] https://en.wikipedia.org/wiki/List_of_countries_by_government_spending_as_percentage_of_GDP https://en.wikipedia.org/wiki/List_of_countries_by_governmen... [1] https://ourworldindata.org/grapher/gdp-per-capita-worldbank?tab=chart&country=JPN~CHL~KOR https://ourworldindata.org/grapher/gdp-per-capita-worldbank?... [2] https://www.ceicdata.com/en/indicator/taiwan/gdp-per-capita https://www.ceicdata.com/en/indicator/taiwan/gdp-per-capita [3] My guess is if we look at return on capital that is around the point where depreciation starts to overtake investment. And the symptoms of wastefulness go from sluggish--or-arrested-growth to now-obviously-shrinking-rapidly.
- seewhydee 3y ago
  > Singapore operates at 15% but doesn't really try to field a military Singapore is one of the most militarized countries on the planet. For example, they currently operate more jet fighters than Australia (100 vs 94).
  - throwaway2037 3y ago
    Yes! I think their national budget rule is that 1 in 4 Sing dollars must be spent on the military. That is an enormous fraction. The annual military budget exceeds 11B USD. With a population of ~5.5M, that is 2,000 USD per capita.
- throwaway2037 3y ago
  16% from Taiwan (18% from here) looks far too low. I find it hard to believe. Could it be they are measuring differently than the other three? Other source: https://www.statista.com/statistics/727604/ratio-of-government-expenditure-to-gross-domestic-product-gdp-in-taiwan/ https://www.statista.com/statistics/727604/ratio-of-governme...

roenxi 3y ago

> What what is the "correct" percent to spend? Quite an interesting question - theories range from 0% to 100% and everywhere in between. Empirical evidence seems to be that >60% causes a collapse of some sort [3] since nobody serious is doing that. And probably a floor of 20% since Singapore operates at 15% but doesn't really try to field a military and is a micronation. Anywhere at 40%+ seems to have problems with industrial production and innovation. I'd suggest there is a sweet spot at 20-30% spending on uneconomic projects, although obviously if that number can be reduced then more spending on uneconomic things means more stuff for everyone. If we look at the countries you suggest, we see 44% (Japan), 27% (South Korea), 16% (Taiwan), 26% (Chile). We see that GDP per capita improvement is worst in Japan [1, 2]. There is a bit of a link between high growth and low government spending. Of course, if a country is growing quickly and the government isn't spending much then government expenditure will appear low so we can't be certain it is causal - but we would suspect that fast growth isn't led by government spending. My personal theory is we see economies grow, then people kill the growth and coast. The high-taxing economies are lovely places to live for a while, but are getting crushed industrially and have generally managed to get themselves into an energy crisis which is starting to have an impact on living standards. Coasting is a bad long term plan. Until someone comes up with a number, we should at least experiment with zones of as close to 0% taxation and spending as can be managed without compromising the consensus essential services. That is the sort of thing China looked to be doing in Shenzhen and it worked wonders. [0] https://en.wikipedia.org/wiki/List_of_countries_by_government_spending_as_percentage_of_GDP https://en.wikipedia.org/wiki/List_of_countries_by_governmen... [1] https://ourworldindata.org/grapher/gdp-per-capita-worldbank?tab=chart&country=JPN~CHL~KOR https://ourworldindata.org/grapher/gdp-per-capita-worldbank?... [2] https://www.ceicdata.com/en/indicator/taiwan/gdp-per-capita https://www.ceicdata.com/en/indicator/taiwan/gdp-per-capita [3] My guess is if we look at return on capital that is around the point where depreciation starts to overtake investment. And the symptoms of wastefulness go from sluggish--or-arrested-growth to now-obviously-shrinking-rapidly.

seewhydee 3y ago
> Singapore operates at 15% but doesn't really try to field a military Singapore is one of the most militarized countries on the planet. For example, they currently operate more jet fighters than Australia (100 vs 94).
- throwaway2037 3y ago
  Yes! I think their national budget rule is that 1 in 4 Sing dollars must be spent on the military. That is an enormous fraction. The annual military budget exceeds 11B USD. With a population of ~5.5M, that is 2,000 USD per capita.
throwaway2037 3y ago
16% from Taiwan (18% from here) looks far too low. I find it hard to believe. Could it be they are measuring differently than the other three? Other source: https://www.statista.com/statistics/727604/ratio-of-government-expenditure-to-gross-domestic-product-gdp-in-taiwan/ https://www.statista.com/statistics/727604/ratio-of-governme...