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Politics : Mainstream Politics and Economics

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From: TimF	3/14/2022 8:48:30 PM
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The Big Takeaway from a Look at Comparative Living Standards September 26, 2021 by Dan Mitchell A very persuasive argument against Biden’s fiscal agenda is that it makes no sense to copy the fiscal policies of European welfare states. Indeed, I routinely share this column from January, which looks at three different measures of comparative prosperity – all of which show the United States is way ahead of nations on the other side of the Atlantic Ocean. One of the three data sources is this comparison of “actual individual consumption” (AIC) in the member nations of the Organization for Economic Cooperation and Development. We now have updated AIC numbers. Here’s a look at the OECD’s latest data. As you can see, people in the United States enjoy levels of consumption 50 percent above the average for developed nations. The U.S. is even way ahead of oil-rich Norway and the tax havens of Luxembourg and Switzerland. By the way, if you look at the OECD’s technical definition, AIC includes “government expenditure on individual consumption goods and services,” so the gap between the United States and other nations is not a statistical quirk based on whether government is (or is not) paying for things. P.S. I can’t resist a couple of closing observations. If you click on the OECD’s link for AIC, you’ll notice that there are seven years of data, thus showing which nations are moving in the right direction or wrong direction (relative to other OECD countries). Eastern European nations tend to have the largest increases, as one might expect based on convergence theory (these nations fell way behind because of communist mismanagement). But the biggest increase was enjoyed by Lithuania, which also is very highly ranked for economic liberty. Not a coincidence. Nations that suffered noticeable declines include Japan (no surprise), along with Italy and Greece (even less of a surprise). The moral of the story is that smaller government is part of the recipe for greater prosperity, even if that’s not the approach preferred by vote-buying politicians. P.P.S. Click here is you want an estimate of how much economic damage would be caused by Biden’s fiscal agenda. danieljmitchell.wordpress.com

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