Saturday, May 3, 2014

Thought provoking studies.

Challenge your modern liberals friends with this information:

Does government spending increase economic growth?

Apparently not. A recent survey of the empirical research on the matter states: 

"[When we examine] studies of the relationship [between government spending and growth] in rich countries, measuring government size as total taxes or total expenditure 
relative to GDP and relying on panel data estimations with variation over time... most recent studies find a significant negative correlation: An increase in government size by 10 percentage points is associated with a 0.5 to 1 percent lower annual growth
rate." [1]

Additionally, recent research suggests that the growth maximizing size of government in rich countries is no greater than 25% of GDP [2], much smaller than the 40% of GDP currently consumed by government spending in the US.

Is it true that regulations don't harm the economy?

According to a 2013 study published in the Journal of Economic Growth: "[Federal] Regulation’s overall effect on output’s growth rate is negative and substantial. Federal regulations added
over the past fifty years have reduced real output growth by about two percentage points on average over the period
1949-2005. That reduction in the growth rate has led to an accumulated reduction in GDP of about $38.8 trillion as
of the end of 2011. That is, GDP at the end of 2011 would have been $53.9 trillion instead of $15.1 trillion if
regulation had remained at its 1949 level." [3]

This means that the average American household is $277,000 poorer than it otherwise would have been.

Does the minimum wage really have no impact on unemployment?

A summary of the last two decades of research from economists at the University of California-Irvine and the Federal Reserve Board found that 85 percent of the most credible studies on the minimum wage point to job loss for less-skilled employees. [4]

Does Capitalism (economic freedom) really make people worse off?

Economic freedom (measured using the Heritage Foundation’s Economic Freedom Index) is highly correlated with higher environmental protection, improved sanitation, cleaner water, longer life expectancy, lower infant mortality rates, more income equality, etc. [5]

Additionally, economic freedom is significantly positively correlated with economic growth and national income per capita [6]. There is significant evidence that economic freedom is the cause of this prosperity [7]. It’s also worth noting that this income isn’t just going to the very rich, rather, it is going to the poor as well. The poorest 10% of income earners in the most economically free countries have an average income which is eleven times greater than the average incomes of the poorest 10% in the least economically free countries (when adjusting for purchasing power disparities across countries) [8].

Please share this info with your modern liberal friends and see if it provokes some thought.










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