The Case for Serfdom

Andrew links to the chart below under the small-government crowd's historic bit of bombastic titling, "The Road to Serfdom", and it comes to Andrew from Radley Balko who requests "Perhaps someone on the left (or for that matter, the right--since they've mostly been in charge of the government the last six years) can explain why having more than half the country's income dependent on the government (and rising) is in any way a healthy development."

Well this is obviously an incomplete answer, but I think Radley and Andrew need to give this chart another look. Do they really look at changes in American society between 1950 and 2007 and feel that this is a story of creeping serfdom and enslavement? I see a population that's a lot healthier, longer-lived, and better educated than the one of 1950; a population where radically fewer people suffer from severe economic deprivation in absolute terms even as millions of impoverished people form around the world have moved to our shores.

I also see a population that, as a result of prosperity, is aging and it's a society that's prosperous enough for elderly people to generally not work and where retirees are given some public-sector guarantees of health care and economic security in their golden years. Most of all, I see a society that's shown that both Marx and Hayek were wrong -- that there's no need for capitalism to entail the immiseration of the vast majority of the population, and no need for efforts to use the public sector to better the condition of the majority to lead to tyranny and Communism; it's a society of democratic capitalism and social insurance and, despite its problems, it's one of the very best places to live throughout the entire history of the world.

Comments

it's one of the very best places to live throughout the entire history of the world.

Yeah, baby!

Posted by SomeCallMeTim | September 14, 2007 10:23 AM

Well, you see, back in the 1950's, the vast majority of Americans lived in covered wagons on the frontier, living their lives in hardscrabble manner and on occasion warily accepting help from a kindly stranger, if'n the calling was big.

Then in the 1960's, liberal college youth grew long hair and sang New Left communist songs and joined the North Vietnamese Army and tore down American society by letting black kids into schools and forcing children to watch Satanist and paganist TV.

Having had the revolutionary youth destroy all the fabric of American life, Americans left their covered wagons and glumly marched into cubicles where they pretended to be happy about their microwave lunches in cardboard boxes.

That's why strong self-made men like Ronald Reagan and Newt Gingrich and George Bush Jr. wanted to return us to the even goldener days of the McKinley administration (pre-anarchist hit job) where everyone was even happier in their late 1800's freedom mode.

Posted by El Cid | September 14, 2007 10:28 AM

So does Andrew and Radley support eliminating the Department of Defense since it's the biggest department by far?

Posted by Dan the Man | September 14, 2007 10:33 AM

After years of watching these people and reading their 'ideas' I feel that the only thing worse than a doctrinaire communist is a doctrinaire anti communist.

Useful people are non-communist, not anti- communist. You can say oh that's too subtle, but when you look at the results, the 'anti' mentality leads to intellectual idiocy and radicalism while the 'non' mentality is still open to new facts and new ideas. It's a better approach.

Americans have paid a price for being the home of the worlds anti communist crusaders. Overcoming this mental framework is what intellectual progress in America will be about for the next 50 years.

Posted by Northern Observer | September 14, 2007 10:35 AM

It's very strange that those numbers look to be calculated by finding one of them and then subtracting it from 100%, since you wouldn't think government beneficiaries and private workers are totally non-overlapping categories.

Posted by washerdreyer | September 14, 2007 10:41 AM

There are several things wrong with this chart and Balko's and Sullivan's comments. First of all, given the number of children and non-working women in 1950, there is no way that private workers constituted 70% of the U.S. population. So I'm not sure what is being measured. Second, whatever is being measured actually hasn't changed much from 1975 to 2005, so there isn't any way that anyone now in power can be asked to "explain" it. Third, the last part of the chart is a projection, so, again, it's a little much to demand that someone justify or explain something that hasn't actually happened.

The first point is the biggest. The chart clearly isn't measuring what it says it is measuring, so it doesn't justify extended analysis.

Posted by y81 | September 14, 2007 10:44 AM

Yes, I was thinking those numbers don't make sense either, given the rise in two income families in the last 25 years. I want to see the statistics and definitions used to create that graph. Are kids in a public school "beneficiaries?" Is a government scientist that creates a process that makes billions for private corporations that license it just a drain on the economic pure vital essences of the nation? Are we to assume that a burger flipper is more valuable than an engineer who happens to work for the state?

Posted by justawriter | September 14, 2007 10:48 AM

Huh? What? Federal outlays are only about 20% of GDP, granted one needs to add on state and local, but there's no way total government spending in the U.S. is even close to 40% of GDP, let alone 60%. So how are you getting 60% serfs? Something is totally fishy about those numbers.

Posted by mq | September 14, 2007 10:49 AM

washerdreyer makes a good point that I hadn't noticed, which is that the two lines are just inverses of each other. Prof. Tufte would have something to say about charts where the second line doesn't add any actual information to that contained in the second line.

I would guess that the chart is measuring "government beneficiaries" (but we don't how that is defined) as a percentage of something (but we don't know what), and then defining the inverse percentage as "private workers" and plotting that. Total statistical and analytical garbage.

Posted by y81 | September 14, 2007 11:04 AM

As the social security checks roll in and my parents revel in their retirement I've noticed them becoming smaller and more blue. Road to Smurfdom is what they mean, perhaps?

Posted by Mark | September 14, 2007 11:16 AM

Welp, first off, Andy don't do math. Sullivan makes no bones about the fact that he's essentially innumerate. So it's no surprise that he's been suckered by a hokey graph. Still, you'd think that after so many years of playing the dunce, he'd be a little more wary.

But my main point is that I haven't bothered to look at darling Andy's site for quite a while, and the effect is much the same as when Brooks and Dowd and Rich got sequestered behind the "Times Select" barrier: The signal-to-noise ratio of my surfing improved significantly. There's no reason to waste your time on the half-informed doodles of a complete narcissist. When it comes to Sullivan, Just Say No.

Posted by sglover | September 14, 2007 11:20 AM

All the chart actually shows is that, between 1950 and 1980, the effects of Social Security kicked in. Because workers didn't start contributing to SS until 1937, very few workers received any payments until many years later. In 1950, only 2 percent of Americans received SS. By 1990 16 percent did. And as commenters have noted, since the full effects of SS have been felt, there has been no systematic change in the percentage of Americans receiving government benefits. So much for creeping serfdom.

Posted by Karl Weber | September 14, 2007 11:37 AM

since it was hayek who penned "the road to serfdom," i enjoy noting that hayek FAVORED the social safety net, and i quote:

There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security should not be guaranteed to all without endangering general freedom…there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody…Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of the assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong….To the same category belongs also the increase of security through the state’s rendering assistance to the victims of such “acts of God” as earthquakes and floods. Whenever communal action can mitigate disasters against which the individual can neither attempt to guard himself or make provision for the consequences, such communal action should undoubtedly be taken….There is, finally, the supremely important problem of combating general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany them…

http://economistsview.typepad.com/economistsview/2006/10/tim_duy_in_defe.html

i am sure radley balko, whom i don't know from adam, has an excellent explanation of how the author of the road to serfdom didn't know what he was talking about....

Posted by howard | September 14, 2007 11:38 AM

"Huh? What? Federal outlays are only about 20% of GDP, granted one needs to add on state and local, but there's no way total government spending in the U.S. is even close to 40% of GDP, let alone 60%. So how are you getting 60% serfs?"

Well, let's do a little math. Annual US GDP is running around $43,000 per capita, according to the CIA world factbook. 20% of that would be, what, $8,600? If you used that to employ half the population as serfs, that would be $17,200 a year, a somewhat serfish income, but more than minimum wage.

However, obviously there was no way 70% of the population, including tykes and ancient geezers, used to be employed in the private sector. So we're probably talking about the percentage of working age, or even employed, Americans. Divide that GDP among 50-60% of that smaller population, and we're talking significant bucks.

So, while I have no idea whether half the relevant population of the US is employed by government at one level or another, (Some of that money has got to be spend on something other than the wages of government employees, right?) the proposition is clearly not absurd from a mathematical standpoint.

What MQ failed to take into account, I think, is that everybody doesn't earn the same income. Taxes on Bill Gates' income can be used to employ an awful lot of serfs...

Posted by Brett Bellmore | September 14, 2007 11:44 AM

Howard, in later editions of The Road to Serfdom and in other works like Hayek's magnum opus The Constitution of Liberty, he says that those early remarks about a useful and desirable safety net just reflect socialist habits of thought he hadn't yet thrown off.

One is free to say, "Um, Friedrich, maybe you got it right the first time." And should, because he did, on that point. But he doesn't gloss it over or try to deny it in later works; he just says that he later sees it as inevitably degenerating into the sort of centralized system of control he's objecting to, and that it's wishful thinking to say otherwise.

Posted by Bruce Baugh | September 14, 2007 11:47 AM

Brett, government employees are only about 16% total nonfarm employment (less than the GDP percentage), and that number hasn't been moving much, so it can't be that. I suspect what is going on here is that someone is counting everyone who receives even one dollar of government benefits in any form as a "serf". Of course, then the serf percentage should be 100%, since we all use the interstate highways, but whatever.

The standard way to do this thing is just to look at the percent of GDP accounted for by government spending, which I still think is best. But for the sake of argument, if a libertarian type wanted to calculate a "serf" percentage, I'd accept the fraction of the population who receive pretty much all (say, 90%+) of their income from government. Anything else just quickly declines into tendentiousness. Agreed?

Posted by mq | September 14, 2007 11:53 AM

Also, social security is a public retirement program analogous to private retirement programs, so I don't think receiving SS benefits make you a serf. You paid in as a worker, you get out now. "Pay as you go" doesn't affect that, it's about the accounting and not the fundamental promise...it's perfectly possible to have a private "pay as you go" retirement program.

Posted by mq | September 14, 2007 11:55 AM

"Howard, in later editions of The Road to Serfdom and in other works like Hayek's magnum opus The Constitution of Liberty, he says that those early remarks about a useful and desirable safety net just reflect socialist habits of thought he hadn't yet thrown off. "

Bruce- Hayek quite clearly supports some sorts of social safety next in his 3-volume Law, Liberty, and Legislation volume, which came out after Constitution of Liberty, if I recall correctly. He's a sort of classical liberal, not a libritarian, and was smart enough to know that many sorts of government action are needed to maintain a minimally decent society.

Posted by Matt (not the famous one) | September 14, 2007 11:59 AM

the effects of Social Security kicked in. Because workers didn't start contributing to SS until 1937, very few workers received any payments until many years later.

I don't think this is true. I've gotta run out the door, but I'm fairly positive benefits started immediately regardless of contributions.

Posted by Ed Marshall | September 14, 2007 12:01 PM

Ed is right, the point of SS was to get a pension program in place immediately (during the Depression). This is also why it had to be paygo. The early workers got a great deal, obviously.

Posted by mq | September 14, 2007 12:07 PM

"Most of all, I see a society that's shown that both Marx and Hayek were wrong -- that there's no need for capitalism to entail the immiseration of the vast majority of the population..."

Ummmmm...much of the world still lives in poverty, so I don't see how the relative prosperity of those living within the borders of the wealthiest and most powerful nation (among a hundreds of nations connected via a global economy) proves Marx and Hayek wrong.

Posted by More Axe | September 14, 2007 12:25 PM

There's no reason to waste your time on the half-informed doodles of a complete narcissist. When it comes to Sullivan, Just Say No.

Well put.

I mean, c'mon--an openly gay man pining for the good ol' days of 1950? He's not just a narcissist--he's an utter twit.

Posted by Uncle Kvetch | September 14, 2007 12:30 PM

My comment about social security was unclear. It's true that SS was paid to people beginning in 1937, soon after the act was passed, and that the amount of payments was not based on the amount of contributions made. But no one received payments who hadn't worked at least for a while AFTER the creation of SS. In other words, if you were 65 in 1935 and had stopped working, you didn't start getting SS checks when the law was passed. This is why there were just a very few people receiving SS in the early years--for example, in 1938 there were just 213 thousand people getting SS. The numbers grew steadily as those who were working in 1937 gradually got older and retired.

Posted by Karl Weber | September 14, 2007 12:37 PM

I grew up in a country where serfdom was abolished only in 19th century, so it was a prominent topic in history as thought in schools.

In all accounts it was clear that the categories of "serfs" and "government beneficiaries" were totally disjoint.

Posted by piotr | September 14, 2007 12:43 PM

So long as the U.S. remains a dumping grounds for the dregs of the Third World, the percentage of GDP going to pay for their sustenance is only going to keep going up.

Posted by orct | September 14, 2007 12:59 PM

bruce, i guess i have to leave it to you and unfamous matt to sort out what hayek said later in life, but you've just sent me on a few minutes search and i can't find any indication that there was a later, modified road to serfdom. can you provide more info?

Posted by howard | September 14, 2007 1:31 PM

I have half-heartedly tried to get to the source data for that chart - apparently it came from a private newsletter.

In any event, it is obvious bullshittery.

Of the 300M Americans, only 20M are employed by the government. So who, then, is a beneficiary? People on welfare, AFDC, medicare? I still doubt those total 150M.

Posted by tde | September 14, 2007 1:40 PM

tde, you return me to the chart, which i'd ignored in favor of hayek-isms!

the chart makes, quite literally, no sense at all. possibly gary shilling had some idea in mind that he can explain to us, but on the face of it, the chart is nonsensical, with its apparent notion that private workers + government beneficiaries = 100%.

i mean, i'm a private worker, but i'm also a government "beneficiary" depending on whatever the hell shilling meant: i have a sep-ira, which reduces my taxes; i have a mortgage, which reduces my taxes; i have an HSA, which reduces my taxes. so i'm a big government "beneficiary" (and therefore presumably a big "serf"), but i'm also a private worker.

Posted by howard | September 14, 2007 1:49 PM

El Cid,

Your missive starts interestingly:

"Well, you see, back in the 1950's..."

... But then you conclude:

"That's why strong self-made men like Ronald Reagan and Newt Gingrich and George Bush Jr. wanted to return us to the even goldener days of the McKinley administration (pre-anarchist hit job) where everyone was even happier in their late 1800's freedom mode."

So here's my question: Why not say Reagan and Co. wanted to return us to the 1950's? Didn't sound as clever to you as the 1890's? Do you think Bush's Medicare Part D or No Child Left Behind Act are more McKinley-era than Eisenhower-era programs?

Posted by Fred | September 14, 2007 2:00 PM

We also note that in the Middle Ages most serfs were not working for the "goverment" (which is fact barely existed as we understand it, or at least was a lot weaker back then), rather they were held in vassalage by private landowners, more the equivalent of Big Business than Big Government.

Posted by JonF | September 14, 2007 2:08 PM

The first Social Security recipient (Ida May Fuller, SSN# 000-00-0001) had paid into the system three years when she received her first check in 1940. I think she lived until 100. Needless to say, she got a phenomenal return on the $40 or so she paid in Social Security contributions over those three years.

I would welcome the first politician who proposes a significant increase in payroll taxes if this money went to create trust funds invested in something other than U.S. Treasury securities (so the government couldn't immediately borrow the money and spend it). Why not hire someone like David Swenson to allocate the funds to top institutional managers? If the payroll taxes were set high enough to create an initial surplus and the trust fund got returns half as good as Swenson has done for Yale's endowment, the payroll taxes could eventually be reduced.

Posted by Fred | September 14, 2007 2:18 PM

Of course, another advantage of establishing real trust funds for entitlement programs would be to lift a huge burden of fiscal uncertainty from long-term federal budget projections. This would likely have salutary effects on the dollar and on interest rates. Plus, transfer payments would stop crowding out other sorts of spending (e.g., on infrastructure) in the federal budget.

Posted by Fred | September 14, 2007 2:22 PM

Howard: I'm in the midst of moving some bookshelves. When I see where I put the Hayek, I'l get you a quote.

Posted by Bruce Baugh | September 14, 2007 2:32 PM

good god in the foothills, fred: you want the government to be making equity allocation decisions?

i mean, i've been a berkshire hathaway shareholder for years and warren buffett does one helluva good job allocating capital and achieving real returns, but that doesn't mean i want the government to give payroll taxes to warren buffett to invest....

Posted by howard | September 14, 2007 2:34 PM

"fred: you want the government to be making equity allocation decisions?"

No, but I wouldn't mind Swenson allocating trust fund assets to dozens of top institutional managers across a broad variety of asset classes as he has done at Yale.

Posted by Fred | September 14, 2007 2:42 PM

Fred, what is the difference between that and the government making equity allocation decisions?

so a guy with a good track record decides government money should go to big cap stocks, raw materials funds, REITs, and what have you and you're all right with that?

you must be kidding. it's not at all like you. the conflict of interest problem is enormous here....

Posted by howard | September 14, 2007 2:48 PM

So here's my question: Why not say Reagan and Co. wanted to return us to the 1950's? Didn't sound as clever to you as the 1890's?

Factually, probably because many Reagan-era (and Bush Jr.) ideologists have mentioned McKinley as their model, and freehand blogging wise, it was otherwise hard to work Reagan into the Conestoga era.

From "Rolling Back the 20th Century", by William Greider

Looking back over this list [of reforms to be accomplished under Bush Jr], one sees many of the old peevish conservative resentments--Social Security, the income tax, regulation of business, labor unions, big government centralized in Washington--that represent the great battles that conservatives lost during early decades of the twentieth century. That is why the McKinley era represents a lost Eden the right has set out to restore. Grover Norquist, president of Americans for Tax Reform and a pivotal leader in the movement's inside-outside politics, confirms this observation. "Yes, the McKinley era, absent the protectionism," he agrees, is the goal. "You're looking at the history of the country for the first 120 years, up until Teddy Roosevelt, when the socialists took over. The income tax, the death tax, regulation, all that."

Posted by El Cid | September 14, 2007 2:50 PM

Read up on Swenson's M.O. with the Yale endowment. I'm a BRK shareholder too, but Swenson's method I think would be more appropriate to managing the sort of government trust fund I suggested than Buffett's much more direct, concentrated approach, which would raise the concerns you seem to be intimating about government interference in the equity markets.

Another approach would be to look at the way successful sovereign wealth funds are managed, e.g., Norway and its Petroleum Fund.

Posted by Fred | September 14, 2007 2:55 PM

Fred, the issue has nothing to do with Swenson's M.O. once government funds are being invested in public markets, everything changes, and not for the better.

should the asset allocation change? imagine the outcries from affected investees.

should we do something different about corporate taxes? imagine the outcries from affected investees.

how should the current tax debate over the pay of hedge fund managers be resolved? well, swenson puts money into hedge funds, so imagine the outcries from affected investees.

i cannot for the life of me see why you think this is a good idea? because you're mesmerized by 16% annual returns?

Posted by howard | September 14, 2007 3:02 PM

Howard,

The "conflict of interest" problem is surmountable with the appropriate set-up and safeguards. Governments deal with these issues all the time. Consider, for example, how the Federal Reserve is set-up, to distance monetary policy decisions from political interference. Consider also how large state pension funds are set up.

Posted by Fred | September 14, 2007 3:17 PM

Howard,

Government money is already being invested in the capital markets. California's CalPERS alone has $250 billion in assets.

Posted by Fred | September 14, 2007 3:29 PM

El Cid,

Bush 43's view of the role of government is closer to LBJ's than to McKinley's. As for Reagan, he voted for Roosevelt. I don't recall any attempts by Reagan to roll back an of the Roosevelt-era entitlements. Social Security was put on firmer footing by the Greenspan Commission during the Reagan Administration, mainly by doubling the payroll tax.

Grover Norquist is a knucklehead. Among most conservatives, the goal isn't to get rid of safety net programs but to transition them into government-regulated, individual savings programs, along the lines of the Social Security systems in countries like Chile and Singapore.

Posted by Fred | September 14, 2007 3:41 PM

Fred, i just can't get over my astonishment. Neither the Fed nor state pension plans are an adequate analog to the problems inherent in the federal government allocating investments.

Have i misunderstood you all along: you can't really be a conservative (despite what you wrote at 3:41) if you want the united states government to own pieces of businesses: that's the very defintion of socialism, and even a lefty likes me think the lure of a higher return is a helluva dumb reason to enter that realm.

PS. let's assume you are an honest conservative. in that case, the problem is that grover norquist may indeed be a knucklehead, but he's not only your knucklehead, he sets your agenda. if honest conservatives want to be respected again, you have enormous work to do in overthrowing the hegemony of the grover norquists on what is called "conservatism" in america.

Posted by howard | September 14, 2007 3:49 PM

Bush 43's view of the role of government is closer to LBJ's than to McKinley's. As for Reagan, he voted for Roosevelt. I don't recall any attempts by Reagan to roll back an of the Roosevelt-era entitlements. Social Security was put on firmer footing by the Greenspan Commission during the Reagan Administration, mainly by doubling the payroll tax.

Wow, that has entirely put me in my place. In fact, even though Bush Jr's acolytes assert that habeus corpus need no longer exactly apply, this in no way means that Bush Jr's presidency is exactly like the reign of King John.

Posted by El Cid | September 14, 2007 3:57 PM

I think the first half of that graph shows why extrapolating completely straight lines like that for 40+ years might be a wee bit of an early call...

Posted by Soullite | September 14, 2007 4:00 PM

Howard,

You got me: I'm a socialist. I'd like to see Social Security and Medicare funded by trust funds backed by assets the government can't borrow and spend, and managed professional and without political interference. Because if these trust funds end up indirectly owning (through a fund-of-funds system similar to the Yale approach) a quarter percent of the outstanding stock in Exxon, that will make Exxon a state-owned oil company like Pemex. Have you considered that limitations on such indirect ownership could be part of the safeguards I mentioned previously?

Do you consider the federal Thrift Savings Plan to be unacceptably socialistic, because its investment options include equity funds passively managed by Barclays? If not, why not? Because the government doesn't choose how much money is allocated to each fund (the participants do)? Because the funds are passively and not actively invested? I am trying to see what your real objection is here. I have trouble believing you really fear this turning into socialism.

As for my comment at 3:41pm, I differ from most of these conservatives in that I think a significant percentage of Americans wouldn't be capable of handling the minimal decision making skills required of participants in a Chilean sort of system. I came to this conclusion after speaking to a few thousand participants in a large state retirement system. Hence, I would prefer pooled funds where the government delegates the allocation decisions to professionals without political interference, and these allocators allocate the assets among institutional asset managers.

Posted by Fred | September 14, 2007 4:35 PM

Total governments, federal, state, local, usually account for about 30% of GDP. In some countries, especially Scandinavia, this is much higher - are people in those countries serfs?

"I don't recall any attempts by Reagan to roll back any of the Roosevelt-era entitlements"

Reagan tried to cut SS payments early in his first term, and got hammered - he was smart enough never to do it again, whatever he may have really wanted to do.

Posted by skeptonomist | September 14, 2007 4:48 PM

"Reagan tried to cut SS payments early in his first term, and got hammered - he was smart enough never to do it again, whatever he may have really wanted to do."

I don't remember any attempt to "cut" Social Security benefits. The one benefit change that was part of the Reagan-era reform was the phased transition to 67 as the new retirement age. Subsequent changes on the benefit side included the phased-in taxation of SS benefits. The Pozen proposal of progressive indexing of benefits (i.e., continuing to index benefits to wages for lower-income recipients while indexing them to prices for higher income recipients) was a good idea as well, but by pairing it with the more controversial private accounts idea, Bush never gave it a chance. Expect to progressive indexing proposed again though.

Posted by Fred | September 14, 2007 5:00 PM

Shilling methodology: meticulous and non-sensical.

He looks at the government employees of all kinds. Good.

He looks at private jobs sustained by the government, which probably means contractors. I hope he pro-rates contractor's activities and payroll, not too hard because we know the aggregate revenue and aggregate revenue from governments (do we? if not, we at least know how much the government pays the contractors, and we can prorate the portion of the total demand placed on the private sector with the total employment. A bit iffy, but not too bad.

He looks at the beneficiaries of Social Security and Medicare. Good.

Now the clown show begins: he looks at the beneficiaries of programs like foodstamps, scholarships, rent subsidies etc. In case of foodstamps and scholarships for undergrads, it is typically a very measly amount and only a fraction of the total income. Add dependents (better, estimate them generously) and you got well above 10% of the population for rather little money

So Shilling gets his number, and then what? IMHO, one could plot number of pages in Yellow Pages of Bergen county (where Shilling lives, or wherever he lives) over the years and make all kind of inferences about the projected level of the number of pages in years to come, together with implication on the economic activity, and even more ominously, our freedom. Make your pick if Yellow Pages are good or evil. Perhaps good: they are self-supporting private sector pages, as oppose to White Pages that get a free ride.

Posted by piotr | September 14, 2007 5:25 PM

The figures are obviously designed to mislead, and based on a concocted definition of terms. The labor market participation rate, for the population aged 16 and older, and including both private and public sector employment has never been as high as 70 percent. It was in the high 50s at the beginnning of the period shown here, and is about 67 percent today. (A smaller fraction of women were in the labor force.) Taking account of the fact of 1) some people are less than 16, 2) some work for the government, and 3) some are unemployed one would have to get a private-employment/population ratio much, much lower than the overall participation rate. Simiarly, the benefits figures must be based on some absurd contortion of the data. A. Sullivan, whom I generally like to read, doesn't know enough economics to know when he touting something absurd on its face.

Posted by Matt | September 14, 2007 5:28 PM

Fred, of course my objection isn't to creeping socialism (although i would object to that): i'm a lefty.

your objection is supposed to be creeping socialism.

but my objection in this case is not dissimilar to what your objection should be: once the federal government has actual ownership of assets in public markets, and once it is known that the government will determine asset allocations, the potential for mischief is incalculable but enormous. it will not be socialism, where the government owns the commanding heights of the economy and factors social costs and benefits into the account books; it will be crony capitalism at its ever-loving worst.

and all for a nominal return of 16%? it's not a tradeoff worth making.

and yes, i say this full well as someone who favors some form of national health care; the difference is that the dysfunctionality of a market-based health care system is easy enough to demonstrate.

Posted by howard | September 14, 2007 5:34 PM

Howard,

Hard to understand how you would be more comfortable with nationalized one seventh of the U.S. economy than, say, a government trust fund owning a fraction of a percent of the outstanding shares of Merck, Pfizer, or GE.

It's a different discussion, but you ought to consider to what extent the current government involvement (where it funds about half of all health care spending) has contributed to some of the problems of the health care system. At the same time, the market-oriented aspects have given us miraculous new drugs, equipment and techniques. I'm wary of any grand lefty schemes that would risk tossing out the baby of private sector innovation with the bathwater of high health care costs.

Posted by Fred | September 14, 2007 7:54 PM

If he includes low-income subsidized renters, he should also include the real estate developers of housing developments who low-income tax credits, which constitute massive subsidies vis-a-vis moderate-income rental housing developers.

From there, he should also include: employees of the real estate company whose salaries are propped up, shareholders, neighbors whose property values are inflated, landlords who can raise the rent because of the inflated demand for rental housing, local schools who benefit from increased property tax revenue, students who benefit from the improvement of the schools, colleges who extract tuition from greater numbers of students and parents who refinance on the increased equity in their homes, etc.

100% of the people in the US are lazy, sapped government beneficiaries.

Posted by StJoe | September 14, 2007 10:08 PM

If he includes low-income subsidized renters, he should also include the real estate developers of housing developments who low-income tax credits, which constitute massive subsidies vis-a-vis moderate-income rental housing developers.

Why should he do any such thing? Such tax credits are usually a bad idea because of their distorting effects on the economy, but tax credits are not government money. Allowing people to keep their own money is very different than the government taking money from some and handing it to others.

Posted by David Nieporent | September 15, 2007 7:45 AM

The chart doesn't plot income. It plots percentage of the population. The beast starvers are misrepresenting THEIR OWN argument.

Posted by Jalmari | September 15, 2007 12:12 PM

Wait til the ones paying for all those recieving have to work 3 jobs to pay for them retiring after 18 1/2 yrs of working at the high school as a janitor. Yup someone is getting $20 an hr mopping floors, here in CT. While I make less per hr machining aircraft parts so he can fly to Fl on his paid days off. ( about 3 1/2 months off a yr, paid )
The real joke is, he can't even spell GED.

Posted by BillW | September 16, 2007 7:45 AM

"but tax credits are not government money"
You're making a distinction without a difference. Tax credits represent foregone revenue. If you think of a subsidy as a transfer of wealth from the government to a person, real or legal, then a tax credit is the functional equivalent of a straight hand-out.

"Allowing people to keep their own money is very different than the government taking money from some and handing it to others."

No, that sounds like exactly the same thing to me. You're making the "that's not Hesperus, it's Phosphorus!" fallacy.

#1, someone's "own money" is a legal construct, shaped mostly by evershifting rules of property law, the tax code, the law of contracts, etc. If the tax code changes to make you more or less wealthy, it hasn't taken or given back money that was yours all along, it has redefined what counts as your money in the first place. If money in your possession is burdened by a legal obligation to pay it to some other party, it can't properly be called "yours". That goes for an obligation stemming from a breach of contract as well as for tax dodging. That doesn't mean the government should be able to impoverish you at will -- the tax code exists as a reflection of quasi-democratic debate over what everyone's "own money" should be.

#2, a tax credit is functionally indistinguishable from a welfare benefit. It takes money from some and hands it to others. If it didn't do that, it would never have come into existence in the first place. These tax credits exist to reward certain types of economic behavior (for example, building a low-income housing development, or taking out a mortgage on your home). It's a redistribution of wealth in its simplest administrative form. It's an allocative decision made on the basis of public policy, not some circular metaphysical guess at what should count as someone's "natural right".

Posted by StJoe | September 17, 2007 12:34 AM