Monday, June 26, 2006

Pol. Ideology 5: Have Movements for Liberty Progressed?

Prof. Tibor Machan, a faculty at Argyros School of Business & Economics, Chapman University, and a researchfellow at the Hoover Institution, Stanford University, wrote a paper, "Are we making progress?". Here's a portion of his paper:
OK, but when compared to what statists are doing, is this anywhere sufficient to advance the cause of liberty? Is it only that the pie ofintellectual activism is growing, with everyone having pretty much the same percentage of a slice of it as forty years ago or is the percentage of the slice with libertarian content growing compared to the rest?... 
I think most of those who have devoted much of their energy to studying and defending the free society, in various areas of specialty or in the mostgeneral terms, would wish to know just how the movement is faring. I am sure those who are championing opposite ideas and ideals would also like to know how well they are doing in the war of ideas. I do know that some have reached great influence, for example, with the United Nations, The World Bank, the International Monetary Fund and similar outfits. And they have no compunction about utilizing money extorted from the rest of us to promote their agenda....
From my observations in my country, as well as what I can gather from some friends abroad, my gut feel tells me that the answer to the question, "is the percentage of the slice with libertarian content growing compared with the rest?" is NO.

While it is true that the number of free market think tanks around the world is expanding, so is the number of statist think tanks and organizations. From NGOs to government think tanks and multilateral, foreign aid think tanks. In the Philippines for example, for every free-market oriented think tank that is created, there are at least a hundred NGOs, pressure groups and think tanks that advocate continued big, if not bigger, government intervention in the economy and society.

Another indicator that I consider in saying the rather pessimistic answer, is the ratio of government spending (G) as a percentage of GDP. This ratio will somehow tell you how strong is the intellectual influence of free market think tanks and individuals in shaping public policy, especially in the dollars and cents aspect of government expenditures and taxation, in each country. The more successful the the free marketers are, the G/GDP ratio should be declining through time. The less successful they are, the ratio will either remain flat if not increase through time. Below are some relevant data.

General Government* Expenditures as % of GDP, 2002 (unless year is specified)

Sweden 56.7%
Denmark 55.9%
France 52.4%
Austria 51.2%
Belgium 49.7% (2001)
Germany 48.6%
Netherlands 46.6%
Italy 46.4% (2000)
UK 40.8%
Switzerland 35.4% (2001)

Poland 42.9%
Czech Rep. 42.2%
Slovak Rep. 40.0%
Russia 37.0%

Australia 35.7%
S. Africa 32.2%
Thailand 21.1%

(source: IMF, Government Finance Statistics Yearbook, 2003)

* General government = central/national government + state/provincial & municipal governments

Data is not available for the US, Canada, Japan, China, other big economies. Only central government expenditures as % of GDP is available, but this will not make data comparison possible because general government includes expenditures by state/provincial and local government units (LGUs).

For the Philippines, expenditures of the national government is around 18% of GDP. If expenditures by LGUs (because they also raise their own taxes and revenues on top of transfers by the national government) are included, it could be around 22% of GDP.

Now, these numbers often do not include unfunded social security and medicare or health claims, both present and future claims. This is an indicator of how welfarist and nanny-statist governments are. That is, the extent of what should have been personal and parental responsibilities, have been arrogated to the "collective" as social and government responsibilities. And so, the higher the ratio, the more welfarist, the more government responsibilities, and the lesser personal responsibilities, are assigned.

Here, the numbers can be scary. For instance, it's about 200% of GDP in France. In the US, unfunded social security and medicare claims is estimated to be $36 trillion, or around 300% of GDP. When public debt and other traditional federal liabilities are included, the total U.S. federal debt is over $46 trillion, or nearly 400% of GDP!

So, if my personal assessment that the movements for liberty and free market have not progressed as fast as the movements for big government (local, national, international), does it mean that we're weak and not doing well enough? I don't think so. Maybe many of us have not yet dwelt into the harder campaigns for lesser government responsibility and lesser taxation.

About statist intellectuals and think tanks reaching far high in justifying high and multiple taxes in many countries partly to finance giant international bureaucracies like the UN, WB, IMF, ADB, and other foreign aid bodies and agencies, they are indeed successful. That is why think tanks who call themselves "free market-oriented" should not live off on funding from foreign aid money, money taken from the pockets of citizens of rich countries. Because if they should go into the hard campaign of tax cuts and smaller government, being indebted to foreign aid money will be a hindrance.

* See also:

Pol. Ideology 4: Comments to Minimal Government Manifesto,  December 05, 2005

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