If you look into world economic statistics even minimally, the first thing you notice is the remarkable correlation between economic freedom and economic success. The Heritage Foundation puts out an annual ranking of all countries in the world by economic freedom. The number of countries ranked is 178. I'm sure there's plenty to question in their methodology, but it would just be quibbling. There really isn't much to argue about over whether the likes of the likes of Hong Kong, Singapore, New Zealand, Australia and Switzerland belong at the top in economic freedom (or at least somewhere close) while Zimbabwe, Venezuela, Cuba and North Korea belong at the bottom. Should Haiti really be ranked as high as 151? That seems rather generous to me, but then there's not a lot of difference between number 150 and number 170.
And the more free the country, the greater the economic success. The correlation is not perfect, of course. But Singapore, Switzerland and Australia are now all ahead of the United States in GDP per capita in all rankings. Meanwhile, Zimbabwe and Venezuela are collapsing, and for Cuba and North Korea, it's hard even to figure out if they have an economy at all. Over at Econlib, economist Scott Sumner points out that every country except one with an IMF PPP per capita GDP over $25,000 has a Heritage Foundation economic freedom index in the top half of the 178 countries. Can you guess the one? It's Greece! Greece is way down at number 130 in economic freedom. The government meddles everywhere in the economy, and the labor markets are tied up in knots. Sorry, but that $25,000 GDP per capita is very likely to prove to have been an illusion -- some combination of the spending of other people's money and fallacious counting of unproductive government spending at 100 cents on the dollar in GDP. Greece's GDP is projected to decline by something like 7% this year. Actually, that "decline" probably mostly results from correcting the previously-inflated measurement to something closer to the level the economy was at all along.
And then there was the Soviet Union. OK, its collapse was 24 years ago. Have we all forgotten?
I ask because out there on the campaign trail, Democratic presidential candidate Bernie Sanders is drawing big crowds and rising rapidly in the polls. Jim Tankersley in today's Washington Post points out that Sanders not only embraces the term "socialist," but also has expressed complete willingness to give up economic growth in favor of income redistribution:
[Sanders is] saying that America’s leaders shouldn’t worry so much about economic growth if that growth serves to enrich only the wealthiest Americans. “Our economic goals have to be redistributing a significant amount of [wealth] back from the top 1 percent,” Sanders said in a recent interview, even if that redistribution slows the economy overall. “Unchecked growth – especially when 99 percent of all new income goes to the top 1 percent – is absurd,” he said.
The Sanders economic program calls for increased government spending and programs without any recognition of capacity or limits.
- Increase federal spending by $1 trillion to "support 13 million jobs"!
- Affordable child care! Paid family leave!
- Expand Social Security!
- Expand Medicare and Medicaid! (They're headed for a crash? Raise taxes!)
- Government pays for all healthcare!
- $15 minimum wage! (How has a high minimum wage worked out for Puerto Rico?)
- Free college for all!
- Protectionism to help retain manufacturing jobs!
- Higher taxes! Still higher taxes!
Does the idea occur to Bernie or his followers that it is possible to kill the goose that laid the golden egg? For those willing to look, there actually are examples of countries that fell back from relatively rich to lower middle income (Argentina, Greece), and from middle income back to poor (Venezuela). And the route there is always the same. It's the route advocated by Sanders.
And by the way, how different is the route advocated by Hillary Clinton? As far as I can see, the difference between the two is that Sanders is willing to advocate specific proposals, while Hillary sticks to vague generalities.