Jeffrey D. Sachs Wants an Expensive European-Sized Government, Which We Already Have

77abjeffrey d sachs Jeffrey D. Sachs Wants an Expensive European Sized Government, Which We Already Have

Done with mucking about in
Eastern Europe, Prof. Jeffrey D. Sachs has taken his message that
the United States government is neither big enough nor sufficiently
control-freaky with regard to the economy to the April issue of
Esquire magazine. In a piece touted on the contents page
with the blurb, “our government is ready to do great work … just
as soon as we get out of its way,” Sachs argues that government is
responsible for pretty much all good things and, if fed a
higher-calorie diet, Washington, D.C. would shit rainbows and
caviar as it leads us into a glorious future. Apart from brushing
aside the bad stuff that governments often do (hrrumph,
drone-assassinations … hrrumph, puppycide), Sachs way understates
the proportion of GDP that government already spends in the United
States as he argues that D.C. is just a tad … inadequate when
compared to its European counterparts.
After tallying up a long wish-list of must-have government
programs, including state-run healthcare and “active labor-market
policy,” Sachs writes in “How
Not To Make America Great”:

On net, I figure that we need around 24 percent of GDP in total
federal outlays in order to have the prosperous, fair, and
environmentally sound economy we aspire to. That, in short, is our
fiscal bill, or what I have recently called “the price of
civilization.”
How does it stack up compared with other well-run countries? If
we add in state and local spending, we’d have around 38 percent of
GDP by governments at all levels. Germany is at 45 percent, the
Netherlands at 50 percent, and Sweden at 49 percent. In other
words, I am low-balling the estimates given American frugality and
bias against government. It’s hard to see how we’d get by with any
less, unless of course we really decide to live through the
twenty-first century with broken twentieth-century infrastructure
and technology.

Whoah … Is that all? Such a bargain! But what is the federal
government currently spending? Well, according to the Heritage
Foundation, the feds are already cutting checks for

22.9 percent of GDP, and rising fast since “In the past 20
years, federal outlays have grown 71 percent faster than
inflation.” Commendably, Sachs wants to cut $250 billion in
military spending, but he’s also counting on savings from a vague
“overhaul” of Medicare and Medicaid, and “at least 20 percent” in
magical savings from a government takeover of healthcare that would
seem to fly in the face of the inefficiencies he sees in Medicare
and Medicaid.
Sachs also gets fuzzy with his numbers when comparing
oh-so-paltry U.S. government spending to the generous levels in
Europe. A peek at the Index of Economic Freedom
shows that he has the numbers about right for Germany, the
Netherlands and Sweden, but it’s hard to see how his vision of an
expanded, more active federal government spending “around 38
percent of GDP by governments at all levels” in the United States
can possibly come to pass when shriveled U.S. governments are
currently spending 42 percent of GDP without his grab-bag of new
programs.
Government Spending as a Percentage of GDP

United
States: 42 percent
Germany: 45.7
percent
The
Netherlands: 50.1 percent
Sweden: 51.3
percent

So, the U.S. isn’t so far out out of the ballpark as Sachs
suggests when it comes to achieving paradise here on Earth with
European levels of government spending. But wait! There’s more!
When governments engage in the kinds of hands-on management that
Sachs favors, and try to extract taxes to pay for it all (or at
least most-ish of it), people tend to start working and doing
business out of public view. That is, economies are larger than
official GDP numbers. Putting aside completely illegal activities
and just looking at legal trade conducted out of reach of tax
collectors and regulators, the countries Sachs mentions have
sizeable shadow economies
estimated at the following percentages of GDP:

United States: 7.2 percent
Germany:14.6 percent
Netherlands: 10.1 percent
Sweden: 15.6 percent

Add those percentages to the total economies and government
spending as a percentage becomes:

United States: 39.1 percent
Germany: 39.8 percent
The Netherlands: 45.5 percent
Sweden: 44.4 percent

You can’t really see daylight between the U.S. and Germany in
terms of total government expenditures as a percentage of GDP.
Paradise achieved, right?
I’m sure Sachs would say that federal expenditures are going to
the wrong places, and he’s right on some points — military spending
could certainly be slashed. Government programs certainly are
inefficient and mismanaged, too. Good luck with that, Jeff. But
American government is already bigger and more expensive than he
lets on. And not only is the U.S. running deficits, but so are
those European governments — everybody is spending more than they
can afford and
running into trouble as a result.
Sachs’s solution is to raise taxes to a minimum of 22 percent of
GDP, but as Nick Gillespie has
pointed out, “Since World War II, the government has raised
more than 20 percent of GDP in taxes exactly once.” That’s despite
great efforts to haul in as much cash as possible.
In terms of the size of our government, the U.S. is already far
more European than Jeffrey Sachs wants to admit. Just like our
friends across the Atlantic, we can’t afford what we have,
bureaucrat-and-regulation-wise. And that’s without even getting
into the desirability of government-managed … everything.

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Jeffrey D. Sachs Wants an Expensive European-Sized Government, Which We Already Have


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