What social programs should a government provide?

When one tries to assess what social programs a government should provide, it might be helpful to assess first, how much wealth that nation has, prior to determining social programs.

After all a poor nation has less capability to provide for social programs than wealthy nations.

It is interesting to look at lists of wealthy nations and see the diversity of social programs they provide for their citizenry.

For instance:

This list of wealthy nations taken from 2004 data:

One can also look at this list (in reverse order) from Wikipedia using 2008 data from the IMF, and assessing Purchasing power per population against GDP

In either case it shows some diversity of nations from different parts of the world with different philosophies.

The European nations, and Japan on the first list, represent industrialized nations in which government spending is a major portion of GDP and there are significant proportions of government spending as part of overall GDP.

Ireland is a fascinating nation, which has moved relatively rapidly from being relatively poor to significantly wealthy. Its amazing growth rate was spurred by dramtic reduction of limits on industrial growth, an incredible record for attracting businesses, and a concomitant explosion of industrial growth. Ireland has a relatively high rate of taxation with top rates on individuals of 42% but low rates on corporations. Ireland's government expenditures are quite considerable relative to overall GDP.

The middle eastern nations clearly show wealth from the relative wealth of the oil industries compared to the small populations.

In any case these wealthier nations have options to spend on social programs that poorer nations do not.

On the alternative side, taking the IMF information and looking at the nations ranked 100th to 110 one sees the following:

Before one begins to answer the question from the opening thread, it is clear that the choices about social programs is severely limited relative to the wealthier nations listed above.

I suggest that the choices a government or nation makes about "social programs" is severely limited by its overall wealth and capability to spend on such programs.

 

This is an interesting and excellent point, Earl. Presuming we have crossed some kind of threshold of national "wealth," one thing that comes to my mind is over what constitutes "necessity" in society. Personally, along with healthcare, I think it's a shame we have what amounts to nothing in the way of a national arts program. No national theatre, no national opera, symphony, etc. Another can of worms, but I would say (against a tsunami of opposition, I am sure) that without a nation's establishment of cultural wealth, it is a dying nation.

 

NPT: You have to know that over the years, funding to the arts has taken a beating in Congress for a variety of reasons. Unfortunately, the most culture I get in a year usually comes from eating yogurt.

Now I would opt for a review of "best competitive sports actions captured on film or video" with an emphasis on team sports. I doubt that one would grab the public's appetite though.

On a more serious note....and with all due respect to your interest, which is supported by others with a high appreciation of the arts, I don't beleive there is an "absolute" with regard to what "social programs" should be provided.

Clearly different nations can afford different levels of "social programs". It was interesting to me to see so many relatively wealthy nations also being amongst those that spend the most on social programs and/or wherein government expenditure is a large part of GDP. I think in a certain regard it disproves the belief that government investment destroys wealth. I suspect in certain regards it supports or assists in wealth development.

 

Among many other lives, I was in 501(c)(3) development, once as Founding Artistic Director for my own Shakespearean troupe, so, yep, I feel the pain. I would say, to our national detriment. Funding to bring the arts to poor kids - something I was involved in - a vital thing, I would say. In America, not a popular opinion any longer, if it ever was. Kids that do not grow up exposed to such things, in my opinion, are kids that learn life is all commerce, venality, "utility" in its driest sense, and little metaphor and pleasure. But a soapbox, and I digress.

No, I agree. What I am saying is this: it seems to me that the reason any of us argue for public funding of one kind or another is because we want to ensure that thing - say, healthcare - is available nationally, to all; otherwise, we'd just say, leave it to private decisions and processes. The "stickY thorn," I would say, is that one person's necessity - what one calls vital to any civilization, especially one with wealth and modernity - is another's frivolity. In this thread alone, many do not think healthcare is something that is a national necessity, to be ensured by public funding. As we both know, at least one on this board does not even view police and fire services as necessary, to be ensured by public financing.

 

You should also index those nations for their national debt. Deficit spending can do wonders for free stuff and inflating GDP.

Government investment. Now there is an oxymoron.

In order to invest, one must have capital. Capital is composed of savings.

The government doesn't generate, create or save anything. It confiscates wealth under threat of imprisonment.

 

Getting back to the thread, there was an interesting correlation between nations with wealth and nations that have a considerable amount of expenditure in "social programs". Quite a number of the nations that were on the top of the wealth lists had maintained relatively high positions on those lists for many years. Meanwhile they had been providing significant levels of social services for decades. Upon review, I stick with what I suggested above, that the choices of social services clearly needs to reflect the capacity to afford such services. For example, India has long subsidized the most basic and elemental costs for its enormous population of impoverished. That included both food and fuel subsidies. Even though India's overall economic growth over the past 6 years has been amongst the world's highest level of growth, the nation continues to subsidize most basic services to a huge impoverished population. Due to world wide inflation India recently reduced the subsidies and is facing widespread dissatisfaction amongst those who need it most.

As to your comments, Guerilla:

I shudder at debt, having worked in the real estate industry for decades and both benefitted and suffered from its existance. Many industries live with debt all the time; (the airline industry by example). Revenues, cash flow, and profit are requisite to enable businesses within these industries to handle it. State and local governments along with bridge and hospital entities issue debt all the time. There ability to deal with it is the same as that of industries referenced above.

National governments need to operate on a similar basis. At this point in time, it would be appropriate for the US government to focus on debt as it has gotten out of hand. It needs to be cut back IMV, not because it should never exist, but rather because it is so large as to impede on any other values.

I'd bet most economists would evaluate transportation investment as a huge benefit to wealth creation. Most of it ends up being government investment. As far as your 3rd and 4th sentences I have no idea what they have to do with a thread on "what social services should a government provide. In an economic sense they are true. I suppose the wealthy nations on the above list are using some of the wealth in their nations that arises through the accumulation of capital in "social services".

As to your last two sentences.....

Again I don't see what these sentences have to do with the opening thread. I suspect they are your opinions with regard to government in general.

I suppose only those states that tend to nationalize all industries would be willing to debate you on the first sentence. I don't believe nations should nationalize industries. History has shown that it generally doesn't work. As to the last opinion in the last sentence, I think most of the people in the world see taxation as a part of the process and tradeoff for being part of a society. I am sure there are many people in the nations with significant wealth and packages of social services that would dramatically disagree. I suspect that many in Norway, that is only growing wealthier with the run up in oil prices, and maintains a virtual cradle to grave social network enjoy the payback in government benefits as they grow too old to work, too sick to work, or benefit with child welfare programs that free up young parents to work.

 

Earl, how does the government debt spend? By monetizing the debt?

I believe you are wrong. It should never exist because it creates a debt burden for the next generation. Do you realize what tax rates former GAO boss David Walker was calling for to manage our unfunded liabilities? When the income tax was introduced 95 years ago, do you know what rate it was?

At this rate, all things systemically staying constant, we will be at or near 80% taxation before the midpoint of this century. That's one of the fundamental arguments, which your side consistently avoids. The other is the morality of demanding taxes through the muzzle of a gun.

But to the first point of avoidance, how can you continue to endorse funding something, which is clearly not-sustainable?

Transportation investment is only government investment because the government controls the roads. We've already had this discussion about private turnpikes before. Yes, transportation investment is probably a solid capital good to put money into. However, that is not dependent exclusively on the government to do so, and again, tries to argue correlation equals causation.

The debate is not, and likely will never be, about the goodness of free stuff for the less fortunate, as an act of compassion even though has been framed that way. But free stuff can come in the free market, not solely from the government. And thus, the issue is not helping people, but how it will be done.

I believe that is what this thread is about.

Just like I don't see what these have to do with the OP. Oh wait, I've quoted them out of context.

Good try however. How about answering my question at the top of this post?

But you think the state should nationalize health care and education?

What first sentence?

Right, that's why it has to be mandatory and enforced with violence.

I've highlighted the specific questions to you in red for your response. Thanks.

 

The Marx labour theory also mentions that a value of a product averages out globally and those who have put a higher value in a product will lose to those who have a lower value in the same product. That is part of the reason that being against immigration makes no sense for a country and actually destroys it. How do you think American auto unions caused the destruction of their own industry?

I must admit I am kind of rusty on Mises since I had this same discussion about 27 years ago when both Marx and Mises were fresh in my mind but I remember that on the time I thought of him as an Utopian and still think the same. The free market theory does not include the most important thing in it's conclusions, the human nature and humans interaction with each other.

Your post about private property shows another common misunderstanding about communism, they are going to take our cars and our homes. In middle east and Asia, the government also adds an extra line that communists want to make all wives to communal property but communism is not about taking away the private property, it is about the removal of private ownership over tools of protection. Think yourself man, who wants to share your shirt or underwear, so as long as you own that, plus the place that you are living in, plus the car that you are driving, plus the bed you are sleeping in then there will always be private ownership.

 

Right, but it still undermines that the price of a good is based on the labor therein, not the mutually agreed upon price of exchange.

Well, then perhaps you should read HUMAN ACTION, which is Mises master work. Mises is all about a priori (deductive) reasoning, specifically based upon understanding human action, and the man acts in his own rational self-interest by making trades that he perceives to be to his advantage.

Mises' system is valueless, and thus, is far from Utopian. On the other hand, Marx and Engel's idea that the state can be withered away through communist political action ending up in a structure that is all about values, and yet no one controls the structure seems to be completely Utopian to me.

I'm quite familiar with the Marxist views on private property.

http://en.wikipedia.org/wiki/Communist_Manifesto#10_Planks_of_the_Communist_Manifesto

A heavy progressive tax. I like to call that the glass ceiling of socialism. High marginal taxes obstruct the profit motive and incentive. It's actually a disincentive to acquire property.

 

You are mixing all kind of concepts, the price and redistribution of wealth has got nothing to do with production of wealth and actual value. How do you think people determine the mutually agreed upon price, by great intervention of God that tells them the price? Even if one person fool another to pay a higher price, it doesn't actually produce any wealth, it redistributes the existing wealth.

again, you are wrong. their idea was that the necessity of state is because it represents a certain class through the history and because by development of capitalism, it will come a point that the private ownership of production tools will be unnecessary, then it will be a true democracy and state for the first time will represent the majority of the society.
Marx refused to predict what form the future state will have but saw hopes in Paris commune and it direct method of presentation for future model.

You must be kidding me, you want to discuss such a serious subject by you looking at couple of random texts from unknown writers in wiki?
It is interesting that you know about heavy progressive tax while Marx himself didn't know about what form the future human organization will take and he said that is something that people in future should decide. You must be more Marxist than Marx.

 

Do you understand the difference between wealth and money?

People set prices by mutual exchange. When the seller will relinquish the good for a certain sum, and the buyer is willing to exchange that particular sum for a good.

Trust me, if I'm buying cans of Coke one at a time, the 4th or 5th Coke is less desirable to me, and I will likely not pay the same price for it that I did the first. That's how demand curtails pricing.

Sorry if the lecture is sophomoric, but most people don't know the difference between money and wealth, how money is made, basic supply/demand, how the market works, etc.

Right, and I generally reject class warfare, particularly Marxist class theory.

What random texts? That's the 10 planks of the Communist Manifesto I linked to. Are you debating that the planks have been presented correctly?

That's the child of Marx and Engels, please don't run from it.

You keep advising me to refer to the Communist Manifesto and then when I link to the planks, you accuse me of being more Marxist than Marx.

 

I'll respond to points, Guerilla:

First, I want to reiterate something within this thread which represents where government can be of great assistance to its citizenry.....

In particular government can counteract the ambition of private citizens and groups who amass such power that they can have an adverse affect on the citizenry. That is a powerful and positive application of government.

Debt in its own right is a component of business, personal life, and government on a very common basis. When handled responsably it is dealt with all the time. When it gets out of hand it becomes a problem. When an individual has debt and loses a job it is a crisis. When a business carrying debt no longer has the revenues to carry debt it is a problem. When a government doesn't have the revenue basis (taxes) to carry debt it is a crisis.

Probably most individuals, businesses, and governments run into time periods when responsable carrying of debt becomes a crisis for any number of reasons. I think what is happening within the US today as far as debt is concerned is two fold.

1. There is an underlying level of liability which the government simply doesn't deal with. It is the liability carried by social security, medicare, and medicade. (entitlements)

2. The current administration is running a financially irresponsable government in which current expenditures (excluding the liabilities referenced above) FAR outweigh government revenues at levels never before seen. Accumulated debt simply to run the government is growing at rapid rates.

Frankly the government needs to deal with both issues. To date, and for maybe 20-30 years there have been warnings with regard to unfunded liabilities for entitlements. No politicians have been willing to deal with the issue in an open and forthright way.

I'd like to see the issue brought into the open for discussion, not unlike the efforts from David Walker. Then let the issue be hammered out in a way that respects all concerns. If it means cutting expenses, raising revenues, or both, it needs to be addressed. I'd rather see it addressed sooner rather than later. The fixes will be easier down the road if it is dealt with sooner.

2. With regard to the second debt issue, there are plenty of areas with which to attack current spending over current govt revenues. The military budgets are humongous. I'd prune there. I'd look to pull out of Iraq in every way possible, though I wouldn't leave immediately.

Deal with the military aspect of the budget and you are attacking the biggest expense item right off the bat.

There are other ways to do this, which are addressed by smaller jurisdictions and businesses all the time.

For instance the airline industry is under extraordinary financial pressure from the fairly recent run up of fuel costs. Per an American industry commentator, fuel costs moved from 15% of total industry costs in 2002 to 40% now. The run up has been far more severe in the last year.

The industry is taking extraordinary steps to combat this change in basic financial viability. Every airline is addressing plane weight at even the smallest levels. The ability to lighten the weight of planes will reduce fuel consumption. Cruise speed is being reduced from 500 mph to 480. Seats are being replaced with seats weighing 15 lbs less. Water levels in bathrooms are being reduced.

The truism big businesses use, and is being followed by airlines, is that there are million ways to save $1 million dollars. Cut a dollar in expenses for each item.

My businesses have done that all the time. State governments apply it frequently since most or all are required to balance budgets. I'm most familiar with Virginia. It generally is well managed from a fiscal basis and has maintained high bond ratings which reflect strong fiscal management.

In dealing with the current and most frequent periods of fiscal difficulty Virginia cut a variety of expenses in a vast array of services and pulled through the times of fiscal difficulty. It worked each time. There was a thread here recently about a local community that is going bankrupt. Do you realize how many American cities have faced bankruptcy over the past few decades. Quite a few. I believe each major city facing that has pulled through.

These issues are dealt with all the time.

The American economy needs to remain extremely competitive. We are not going to compete with China or India on low wage, labor intensive industries. No nations are successfully competing with these two giants. Korea's economy has been sluggish for about 5-6 years due to competition with China. Vietnam with very low wages in low wage labor intensive industries is struggling against China.

The US competition has to come from other areas. Fortunately many of the underlying strengths of the US economy promote competition. One of the areas that could limit growth are the tight immigration limitations on skilled knowledge workers. Let them in. Microsoft recently moved a growth section from Seattle to Vancouver because of limitations on accessing skilled knowledge workers from overseas nations.

That is bad sh!t for America. Change those laws to facilitate the growth of knowledge industries. That is where the opportunities lie.

With regard to the sustainability question.

It is simply not clear and hasn't been addressed. Address the issue as I referenced above. Then start dealing with it. There are enormous creative ways to deal with financial problems. The airlines could have addressed weight 5, 10, 15 years ago. They didn't have the incentive. If they dealt with the issue, they might have cut 1-2% on fuel costs then and raised profits similarly. Address the issues now and see how it plays out.

I've dealt with these issues on personal, investment and small and medium sized businesses over many years and have seen them played out in far larger entities. They are typically always addressable.

Health Care and Education.

We currently provide public education that is underwritten primarily through local/state taxation. I'd continue to do so. Its been one of the sustaining strengths of America. I'd keep dealing with it on an ongoing basis.

Deal with the problems it faces. I'm not a huge partisan person. If the educational unions are creating issues that adversely affect the ability to provide quality education .....f*ck em. Move toward merit with regard to promotion amongst educators. In the past year I've seen the Washington DC school system finally be addressed by a govt that is making revolutionary changes. This is after decades of abuse, waste, internal corruption, and very very very poor results with regard to graduating qualified students.

Going forward I bet we will see positive results with regard to the quality of education and the controls on costs. In effecting the first set of changes the current mayor faced the usual volume of complaints from citizens and the former board that controlled education. He ramrodded through it and received support only because it has been so miserable for so long.

I hope it ends up turning around. We will see. At the least it is going to be run on a far far far tighter budget saving a heck of a lot of money. I hope the educational benefits are similar. Its in early stages. We will see the results going forward.

Higher education costs have skyrocketed over about 3 decades. That situation is similar to the overall costs of health care.

I don't believe that higher education or health care have been subjected to the powers of the market during those time periods. There is no virtual or significant choice of private colleges based on price differentials. It simply hasn't existed. The price choice has been between state schools and private schools.

Institute elements that would inflict the market on education. Instead of the US News World & Report annual survey of schools start promoting a price/ value evaluation. Who knows. If private schools start facing a world where price is part of the evaluation process it will quickly start to prune costs in an environment that hasn't faced that in about 30 years.

Health Care is very complex. I do believe it has not faced price competition over decades just as private colleges have not faced the issue.

Very few consumers evaluate doctors or hospitals based on price along with other concerns. It simply is such a small element of the market that it hasn't had effect.

Consequently I don't believe the cost side of health care has been effectively addressed. On top of that it has layers of complication with insurance coverage and sources of insurance coverage ranging from private to government. Finally mistakes and medical malpractice are not effectively or efficiently dealt with. But it is truly complex, essentially complicated by the entire third party method of payment.

I'd reserve judgement until I saw studies from qualified researchers that could assemble the entire aspect of the story and would be begin to break it down.

My strongest corporate experience comes from being a corporate tenant representative for businesses and entities in relocating and finding new office space. I did it for decades. I know tons of tricks to effectively cut occupancy costs without effecting work effectiveness.

Occupancy costs often run between 5-10-12% of office intensive operations.

I could take almost any office intensive entity and with enough time and energy effectively cut that element of costs by a significant level. I did it hundreds of times. Most businesses don't look at this item aggressively. They only do it when the sh!t hits the fan or there are very aggressive managers overseeing costs all the time on a continuous basis. Do you know why Walmart grew to be the powerhouse it is? The corporate culture from day one has always been "be the lowest cost provider of services". Walmart is the killer beast of a client. Ask any vendor that supplies a service or product to them.


I and my colleagues own and operate several businessses. We are addressing a variety of issues. We have mastered certain things and can kick the sh!t out of competitors. Now we are addressing new markets and getting a handle on new problems. Once we address those issues we will kick the sh!t out of competitors in new markets.

The government and citizenry is capable of addressing issues and problems if the level of political polarization is minimized, money is removed from politics which creates totally f*cked up decisions, and issues are presented with intelligence and dealt with by skilled people.

Take apart the government and the effective balance against private power and corruption is eliminated. Then you have Lebanon.
As a business person my colleagues and I own/operate several businesses

 

Let me add some points.

Our government over many years keeps skewing towards governance dominated by politics and money. The parties only accentuate this by maintaining the election process as very expensive and facilitating lobbying that is based on money.

They should get rid of a lot of that, or all of it and it might turn issue debate into something substitive rather than the game it is today, dominated by interest groups that connect with political polemicists that want power rather than effectiveness.

Over a fair number of years, the financial and real estate industries together have dominated lobbying expenses and been toward the top of the campaign contribution list for industries.

2 out of the last 3 recession periods arose because of bulls!t economic bubbles from finance/real estate industries....the one we are in now and the one from the late 1980's-early 1990's. During both periods govt oversight of the offending financial institutions was essentially lifted because of heavy lobbying by the industries.

The 1980's recession period was caused by brutal overinvestment by primarily Savings and Loans and secondarily banks into the commercial real estate industry for office buildings.

The cost after the debacle settled was about 1,000 S&L's folding costing a net loss of about $500 billion in assets. The govt. ponied up about $120 billion in long term debt to settle the losses on savings that occurred from the institutions failing and the industry ponied up about $20-30 billion.

After the high interest rates of the 1970's that impacted S&L 's by forcing them to sit on existing lower rate returns when their borrowing costs skyrocketed the industry was given new powers to make loans and was left unmonitored by govt. oversight.

The industry, made up of thousands of S&L's making tons of decisions on real estate loans, ended up funding more suburban office space in the nation, during the 1980's then all previous such space in the aggregate. Demand wasn't close to satisfying the supply.

Because I had handled quite a few deals on behalf of the s&l's after the late 70's and early 80's crash, I sat in and saw these loans being approved.

Wow. I had sold land for buildings, knew the market, knew the returns. Every deal I saw didn't make sense on paper. Not one. Every one was financed from the perspective of a ponzi scheme, in that the buildings could be sold for future higher values. Sound familiar? It just happened again on the residential side.

After a while I no longer could sit in on the process because I opened my big mouth on every one, while sitting in on two institutions going through the process.

Those were 2 amongst thousands doing the same thing, again and again.

Not only was govt financial oversight removed but S&L's were allowed to use some bs accounting process called Regulatory Accounting Principals. RAP. Read about it. It allowed S&L's to defer losses.

Meanwhile lending standards were diminished and loans were being made with virtually nothing down and were non-recourse, meaning in default the investor/developer owed nothing. Sound familiar?

The whole thing could have been prevented with some oversight and management that would have tightened loans of that ilk.

The government stood by and did nothing because the financial and real estate industry bought them off through contributions, lobbying and complaining about government oversight.

More or less the same process happened with the current residential financial bubble. Again the govt removed all oversight. Again the govt allowed huge volumes of loans without any form of credit worthiness.

The industries work off greed and fees. The industries complain about govt. intrusion but the industries will invariably roll toward the quickest easiest buck regardless of consequences.

The industries are backed with political slogans that argue against tight controls, govt reporting, freedom to invest, etc etc etc.

The industry arguments coincide with partisan politics that complains about reporting restrictions (that is bogus--it usually amounts to hiring a few more people to meet reporting requirements (easily handled overhead)....and restrictions on trade, etc.

Its bogus. The financial industries veer toward the fastest easiest way to make fees. There is very little incentive in the industries for long term business growth and wealth development. They suck up huge volumes of investment, they run the world banking environment, they are often publicly owned, and their screw ups cost big time.

Meanwhile this country still offers incredible incentive for business development. I follow one industry that is trying to crack through on opportunities to use the web to grab a hold of billions of dollars of expenditures. I see plenty of start ups and existing businesses capturing funding in the under $1 million dollar level to the low millions to try and be the next killer application.

Nobody has yet figured it out. Even in this crummy investment environment with tightened credit, I see money flowing into these attempts every month.

The government isn't blocking or hampering any of these opportunities. Multiply that industry opportunity by 1,000 others and there are a lot of opportunities to become a killer industry that can create great wealth and expansion. Its just not an easy process. Its difficult, but innovation and success comes from many attempts. This nation has flourished off of this type of environment.

Now none of this post has anything to do with social programs but a healthier govt with a focus on oversight in areas where excesses kill economies (ie the real estate/financial industry and others)--and maintaining an environment where business can flourish, can partner in creating an environment where wealth is created and the big issues of debt can be handled.


and to tie it into the thread.....if wealth is created..then the govt can put some money into a couple of social programs....even a pretty low cost one....like for the arts....that NPT would like.