Wrong, wrong, so very wrong

Apparently people respect Vito Tanzi. At least, that’s what an article in the Globe and Mail tells me, and their journalists must be impartial right?

Tanzi apparently believes that because government spending has dropped as a fraction of the GDP in Canada and Sweden over the past 20 years that it will continue to drop into the future. I guess two data points does make a linear trend. Neil Reynolds, the author of the article, compares the levels that we’re spending with those of the 1920s and the 1700 and 1800s, and seems to argue that we should go back to such spending.

That’s right.

Reynolds is actually suggesting that we ought to roll back our clocks to a time when:

  • Women were not allowed to vote
  • Slavery was legal
  • Racism was accepted
  • There was no public health care
  • There was no social security
  • Homosexuality was a crime
  • Capital punishment was allowed
  • Corporal punishment of children was allowed

Oh the good old days.

Of course Reynolds doesn’t say this, he says “Mr. Tanzi contemplates no return to Dickens.” Tanzi merely wants to rid us of the inefficient government, which can then be replaced by… well it’s note clear, but supposedly it has to do with market solutions.

Good thing the market always has our best interests at heart…

One specific issue that really got me in this article was this bit:

Mr. Tanzi is not “anti-government” for ideological reasons. He goes, he says, where the empirical evidence takes him – which makes his 14th book, Governments Versus Markets: The Changing Economic Role of the State (published in May), so important.

To be fair, I haven’t read this book, but Reynolds did a piss-poor job of presenting any of that evidence in this article. All he provided was a couple of data points for Canada and Sweden’s government spending as percent of GDP. Meanwhile, we have trends like the USA, bastion of free-market capitalism that it is, that are ballooning out of control. This graph would even suggest that spending is either going to remain constant (since apparently we just do a linear regression from 1990) or will continue to rise.

Taking a broader picture of nations, Wikipedia has a list of countries government spending as a percentage of GDP. While nations like Cuba and Zimbabwe top the list, most of Europe sits in the 40-60% range. Meanwhile, countries like Burma, Guatemala, and Haiti fall near the end of the list.

Perhaps Tanzi sees some advantage to living in a nation like Burma (with government expenditures of a mere 8% GDP), but I seem to doubt it as he seems to have spend his life in Italy and USA (with spending of 48.8% and 38.9% respectively).

Tanzi and Reynolds do admit that reducing government spending will increase inequality, but they figure that’s peachy because communism is evil. And I wish that were a strawman argument:

Mr. Tanzi concedes that the diminished state will increase economic inequality. But he argues that equality can’t be the state’s only goal. “If it were,” he says, “North Korea and Cuba would be model welfare states.” Further, though, he argues that there will be many other ways to reduce inequality – when people are once again lightly taxed. The irony of the 21st century, he says, is that big governments have consistently pre-empted reform – by replacing market functions instead of merely regulating them.

[citations desperately needed]

What other ways are we talking about? Private charity?

The best article I could find* on private charity comes from Margaret Little [pdf]**. She notes that private welfare was replaced by public systems, which are now being eroded and replaced again by private charity. Unfortunately, many of these charities have hidden (or overt) agendas, and may discriminate in their generosity. She cites the Salvation Army as an example of one religious organization that has been known to proselytize to its patrons.

This Globe piece really angered me. Hence the disjointed analysis presented here. Nearly everything in it is wrong, and I’d almost go as far as saying it approaches Fractal Wrongness. I may have to come back and pick apart specific pieces one-by-one.

It really worries me that our media is giving such an uncritical platform to such dangerous ideas. No wonder our inequality is rising rapidly.

*I tried a couple quick searches on Google and Google Scholar, but it is exceptionally hard to find good, objective data on the efficiency and efficacy of private charity versus government welfare. Most come either from Libertarians (who often begin by decrying be taxed at gunpoint) or the religious. If anyone has some good peer-reviewed data on this, please send it to me.

**Margaret Little, “The Blurring of Boundaries: Private and Public Welfare for Single Mothers in Ontario.” Studies in Political Economy 47, pp. 89-109. Summer 1995.

[Edit: Fixed wording]