Sweden’s Shrinking State

Ah, Sweden, the very mention of it will often bring about the phrase ‘liberal paradise’. The land where healthcare is free, everyone lives long lives, and there’s no crime or violence, despite huge taxes and a massive public government.

All of it sounds wonderful except: it hasn’t been that way since the early 1990′s and its government is shrinking by the day.

Yes, this ‘paradise’, it seems, has been deregulating and lowering both taxes and spending for the past 20 years at a rate that’s absolutely astonishing. This myth of the ‘perfect state’ has come about due to a few things:

  1. Between 1850-1950, Sweden had one of the fastest growing economies in the world, it amassed massive capital, and was largely unregulated.
  2. Between 1950 to 1980, all the state programs began with the huge surpluses they had, and marginal taxation skyrocketed to 70% – this is the liberal paradise that people mention. Times were good, really, but it was unsustainable.
  3. Starting in the 1990s, the ‘banking crisis’ occurred where banks collapsed, the healthcare system utterly failed, killing thousands, and the entire financial system started to collapse on itself. Spending as a percentage of GDP  was at an all time high of 71.1% (for reference, the US now spends 103%). The education system was on the verge of collapse and many, many jobs evaporated overnight.
  4. Sweden went from 4th richest OECD country to the 16th in the span of 20 years.

Strangely, no big government advocate seems to know of the 1990′s Swedish banking crisis. It’s in plain view: http://en.wikipedia.org/wiki/Economy_of_Sweden#Crisis_of_the_1990s and is a well studied piece of history in Sweden itself. The reasons are clear: big government intervention. Sweden, instead of continuing to go down the bad course, actually did something that is rarely done: they reversed course.

In 1994, following the banking crisis, massive market reform came down and entire industries were deregulated. Private schools were started, a voucher system was put in place, and largely, the majority of top performing schools in Sweden are for profit. The banking system was deregulated, many services were cut, taxes lowered, and spending as a percentage of GDP was cut from 71.1% to 53.3% an overall reduction of the state by over 30%.

Even the citizens are wanting less state provided healthcare. A rise of private insurance has been growing in Sweden, In 2011 about 440,000 people had private health care insurance in the country of 9.5 million (source: http://reason.com/blog/2014/01/22/socialist-swedes-take-to-private-health). If this public paradise was so great, why is it radically moving towards privatizing and deregulation faster than the US is moving towards socialization? Now, Sweden is still less ‘free’ than what most libertarians would wish, but it does show that a country can turn itself around and that even the most praised ‘ideal liberal states’ are not immune to the ill effects of big government.

For more reading on the subject, an article that appeared in Forbes does a great job going into more detail: http://www.forbes.com/sites/paulroderickgregory/2012/05/13/look-to-sweden-obamas-high-tax-gurus/

Debt: The New Religion

When our nation is faced with a presumed “crisis”, the government immediately jumps into spending mode.  The prevailing wisdom cites that the more the government spends, the more quickly our nation emerges once again as the shining superpower of the world.  However, what do the numbers prove about how “super” or power truly is?

First, before we proceed onward, a graph that everyone who cares about being an informed voter should take a look at. It depicts the amount of debt we have as a percentage of our national economy as measured by the Gross Domestic Product or GDP.  The graph starts with the aftermath of the Revolutionary war and covers through 2011.  This was posted last year by Quartz (source) and is a site not known for a conservative slant.  It shows, clearly, that when the nation is faced with a crisis, the national debt skyrockets as the government spends money.

One more time to let that sink in: when the nation is faced with a crisis, the government spends money. Simple enough logic and we’re easily able to see why. During war the government spends, after wars spending starts to curtail as we repair the damage done.  History clearly shows that even after World War II, spending declines in a trend that isn’t any different in slope (though greater in magnitude) than previous events. However, there’s two major anomalies to this graph.

First, we notice that spending stops its downward trend in 1980 and begins to climb despite the absence of war or a “crisis” The second is an increase in spending before World War II – The Great Depression.  These two sharp increases do not equate to any large scale conflict.  They also do not ‘trend downwards’ afterwards; instead, they seem to act more like spending floors which keep the average level of spending much higher than in previous generations.

In other words, when government spending increases, it rarely returns back to its original level.  Without a doubt, our obsession with keeping a massive debt started in the 1930′s and has continued today without ever falling back below World War I levels. Another graph is quite revealing:

Every year since 1936, the United States government has spent more relative to its GDP than it did during World War I.

That means, as cited by the Congressional Budget Office from which these graphs are derived, we are poised to spend more money on daily government operations then we did in World War II – during “crisis mode”. 

As a percentage of our GDP, we’re currently spending a hair over 35%, and if the spending trend continues past 2030, our nation will spend over 100% just for daily operation of our government.  Remember, these are not some conservative blogger’s opinion – this is from the Congressional Budget Office.

Spain, Greece, Italy, France and other countries now face 25% unemployment, and they all share something in common: their government spending as a percentage of GDP was far too high for their free markets to bear. Currently, according to the CATO Institute, Spain’s “government spending as a share of GDP leapt 2.3 percentage points to 41.5% in just one year.” (source)  That’s not much higher than we are currently spending. 

Not only is government spending a threat to free market economies, the graph below depicts the dramatic increase in the rate of total accumulated debt:

Currently held federal debt (source: Wikipedia)

These numbers look worse when you see the total amount of debt we’ve accumulated has tripled in just twelve years. Worse, the occurrence of negative real interest rates (whereby the inflation rate is greater than the interest rate of the debt) prevents the debt from ballooning even more. So in theory, we should have a very low debt due to reasonable temporary spending during periods where borrowing money was cheaper than interest paid on it — but we don’t. We simply have a slightly smaller mountain of debt despite all free market forces at work.

Why not spend reasonably and leave ourselves extra slack for when a true crisis emerges? Simply put, we have accepted the Religion of Debt in America. We accept it for ourselves when we buy cars or gadgets that we cannot afford. We accept it when we are told home ownership is the American dream. We accept it when we attend expensive colleges and universities. And, we accept it when it comes to our government.

Common rhetoric about anarchists, communists, socialists, and crony capitalists all serve to distract from the one truth: no one in government has any interest in reducing our spending to pre-World War I levels.  Not Republicans, not Democrats.  Instead, both are big government and argue over whose government gets to spend the dollars.

If we can balance the budget or (gasp) create a small surplus, the national debt will begin to erode itself naturally. Through both fiscal responsibility and natural market forces (such as negative real interest rates) we can get back to a modest, manageable debt and stop wasting so many taxpayer dollars on interest payments or government pork projects.

Want further proof that debt is the religion of the US?

Gallup poll on the power of the federal government today (source)

That’s right. The same folks who claimed the government was too powerful when President Bush was in power now find themselves wanting more power.  It is important to note, both government spending and power of the federal government has only increased since 2003.

Our nation is so consumed with debating the rationale of spending and flexing the powerful arm of the federal government that nobody asks whether nor not we should. The question needs to be “should we?” instead of “how should we?”, and every election, millions of voters are tricked into blindly pulling the R or D lever.  If you vote for ‘the lesser evil’ or for a single party a majority of the time, you need to get out of the voting booth. You’re the problem.

It’s time to wake up, kill the rhetoric, and disassociate yourself from a party. 

Please, you’re killing us all with your religion.

Worst Politician of the Week: Ted Yoho

As part of a continuing series to expose any politician who is clearly unfit for office, we will expose the biggest lie, craziest statement, or most egregious behavior of an elected official or one running for office every week.

WPotW Winner
10/06/2013

Kicking off the series of the Worst Politician of the Week, we’ve got the congressman from Florida’s 3rd district: Ted Yoho. An interesting gentleman, he was a veterinarian before being elected to Congress in the last congressional election (2012). He is a freshman congressman, but not to worry, what he lacks in experience and knowledge, he makes up for in sheer stupidity and ignorance.

In a recent interview with The Washington Post, Yoho was quoted as saying:

““I think we need to have that moment where we realize [we’re] going broke,” Yoho said. If the debt ceiling isn’t raised, that will sure as heck be a moment. “I think, personally, it would bring stability to the world markets,” since they would be assured that the United States had moved decisively to curb its debt.” – The Washington Post (source)

We double checked the statement’s truth of origin given its absurd nature in order to make sure it wasn’t taken out of context or somehow misrepresented, we found it is not.  Indeed, Yoho said this to The Washington Post and still continues to back this sentiment.

Not only would things be most certainly less stable if the United States were to default to the creditors, but it would cause a myriad of further harmful consequences. Our dollar would lose value, interest rates would rise, and our credit rating would be downgraded. Nothing positive can come from a default. Period.

This cow doctor (seriously) without the slightest clue in what or how the debt ceiling works – and lacking even the most basic modicum of understanding of economics – is playing with the fate our nation’s financial future as if it were a game of chicken. Proudly defiant, he punctuates his ignorance with certainty in the statement:

“You’re seeing the tremor before the tsunami here,” Yoho said. “I’m not going to raise the debt ceiling.”

Regardless of whether you believe the debt ceiling can be used as a political negotiation tool or not, the truth of the matter is: the debt ceiling must be raised to avoid a default. It doesn’t matter the mistakes we’ve made in the past – defaulting on our debt will in no way help rectify or better anything. It will only lead to unnecessary pain.

This lunatic has decided to put his ‘foot down’ without actually knowing what he is putting his foot down over. The worst part is that  he hasn’t taken the time or effort to become educated about this important, critical issue and he is a new representative . If he can’t be bothered to learn anything now, while he is new to the capitol, what will he be like next term? Or ten terms from now?

For his failure to do any research or attempt to be reasonable as a member of the United States Congress, Yoho is hereby given the Worst Politician of the Week award in recognition of his incredible ignorance and stupidity.

As always, sources are provided below that we’ve used for fact checking, this week:

For general information on the debt ceiling, readers can visit: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/04/absolutely-everything-you-need-to-know-about-the-debt-ceiling/

For why defaulting or hitting the debt ceiling would be a bad thing: http://www.bloomberg.com/news/2013-10-13/u-s-risks-joining-1933-germany-in-pantheon-of-deadbeat-defaults.html

Source link for Ted Yoho’s comments: http://www.washingtonpost.com/politics/for-ted-yoho-government-shutdown-is-the-tremor-before-the-tsunami/2013/10/04/98b5aa8c-2c3c-11e3-8ade-a1f23cda135e_story.html

Government to take in record amount of taxpayer revenue

Article Highlights

  • CBO predicts record tax revenues for Fiscal Year 2013
  • Economy improving from recession since middle of 2007
  • High revenues and high debt illustrates spending problem

In the midst of budget crises and an incomprehensible sequestration nightmare, there is one element of the equation that no politician wants the people to know about: the government is projected to take in records amounts of revenue in 2013, topping off at an estimated $2.7 trillion.

According to a report by the Congressional Budget Office, federal revenues have been recovering from the recession since mid year 2009.  The previous record for government revenue was in 2007 where government took in $2.6 trillion in money confiscated from the American taxpayer.

The projected $2.7 trillion in 2013 revenue would be the most money the government has ever taken in, cutting a whole in the argument among our nation’s career politicians that an increase in revenue is needed to avoid budget cutbacks and sequestration, which is a process to withhold money from departments and agencies when debts are high.

When both revenues and debt are high, spending is the problem.  “Tax the rich” schemes do nothing to cure the spending disease in Washington.  The United States government has repeatedly shown that political careers are far more lucrative funding the medicine rather than the cure.

2012 brings big debt and fewer liberties to Americans

rules_1668_1668The year 2012 saw tremendous encroachments into the freedoms and liberties of the American people, and few of our Congressional representatives stood in the way of such abuses of power.  From taxing internet purchases to allowing the government to throw people in jail based on “secret” evidence of terrorism, this year marks another elimination of freedoms and liberties in the United States.

A couple things did increase, though: our national debt and the number of well-paid federal government workers.

The NDAA (National Defense Authorization Act) not only gave the government the authority to continue expensive and never-ending wars overseas, but it also gives Washington far reaching powers to imprison American citizens for the mere suspicion of terrorism.

“This bill takes away [the right to a trial] and says that if someone thinks you’re dangerous, we will hold you without a trial. It’s an abomination,” remarked Kentucky Senator Rand Paul who argued fiercely against the inclusion of the indefinite detention provision within the NDAA.  Paul cited Japanese internment camps as historical evidence that government cannot be trusted with powers that rely on behind-closed-doors “secret” evidence against the American people.

The United States’ punitive system of taxation is forcing companies to funnel millions of dollars to overseas bank accounts.  Facebook, in fact, has funneled nearly a half billion to Cayman Island banks.  The U.S. government’s continued insistence to punish success in the United States has once again prompted companies in 2012 to take their financial business elsewhere.

At the state level, an estimated 225,000 wealthy residents have fled California to escape its tax structure.  This year, Democratic Gov. Jerry Brown successfully pushed through tax increases that make Californians the highest taxed citizens in the country as the state’s deficits skyrocket to nearly $30 billion.  Taxing the rich never works, and as reported on the Small Government Times before, ends up sending your wealthier taxpayers running for the hills.

How about that U.S. Postal Service?  This year marked the first year that the government distribution service defaulted as the organization continues to leak money.  Daily, the Postal Service is losing about $25 million.  The financial hemorrhaging is preventing the service from paying current and future retiree benefits, roughly $5.5 billion in 2011 and 2012.

The number of federal workers, along with their salaries, have seen dramatic increases in the last several years.  According to public record, over 500,000 federal government workers earn more than $100,000 a year (an increase of 10% since 2006) and average nearly twice the private sector in annual salaries.  In fact, 77,000 federal workers make more than state governors.  Despite economic uncertainty for the majority of the American people, more than half of those in Congress are millionaires.  Several calculate their wealth easily in the hundreds of millions.

More than 40,000 state laws took effect this year, ranging from a higher minimum wage for several states, fining bus and truck drivers for talking on their cell phones while driving and a variety of regulations on concussions suffered while playing sports.  Some states made it a requirement that larger businesses use the E-Verify system to confirm the legality of its workers.  California gave illegals brought to the United States as infants access to the same statewide scholarships that legal students enjoy.  Other states are requiring school and city coaches to bench younger players when they are believed to have suffered a concussion.  Seat belts laws, inclusion of gay and lesbian studies in school curriculum and requiring state licensing to perform abortions all helped to increase the number of laws and regulations offered in this country.

The U.S.’s national debt has skyrocketed passed $16 trillion, an increase of a whopping $5 trillion since Barack Obama took office.

Elections have consequences, ladies and gentlemen.  Stay vigilant.

Obama demands tax hikes on rich before any compromises

Days after the re-election of Barack Obama, the president said that any compromise from his office on the issue of taxes and the national debt will hinge on the inclusion of tax increases for wealthier Americans in an fruitless effort to slow our nation’s rising debt and limit the ensuing economic calamity.

“I’m committed to solving our fiscal challenges, but I refuse to accept any approach that isn’t balanced,” the president said.  Apparently to Mr. Obama, “balanced” means nothing more than offsetting any spending cuts with further tax revenue from this country’s job providers.

Obama insists on raising taxes on those who make more than $250,000 a year, although hard numbers on how much of a rise remains unknown.  According to Obama, a majority of Americans also believe this nation’s punitive tax system should be strengthened for those who are considered “wealthy”.

“I just want to point out, this was a central question during the election. It was debated over and over again. And on Tuesday night, we found out that the majority of Americans agree with my approach,” he said.

This news comes at a time when deficits remain at all time highs.  October, the first fiscal year in 2013, has already seen a massive increase in budget deficits — $6 billion above the estimated $114 billion.

Budget Office predicts another year of $1t+ deficits

According to estimates from the Congressional Budget Office, the government will once again run deficits that exceed $1 trillion in 2012, this time reaching $1.1 trillion.  The economic future of this nation is “uncertain”, at best.

“CBO expects the economic recovery to continue at a modest pace for the remainder of calendar year 2012, with real (inflation-adjusted) GDP growing at an annual rate of about 2¼ percent in the second half of the year, compared with a rate of about 1¾ percent in the first half.”

http://www.cbo.gov/publication/43539