Sunday, November 2, 2008

We are all Socialists (1/3, at least)

The recent financial bailout and presidential elections has spurred an unusual amount of talk about socialism. None of it very intelligient, of course. Yet it is still welcomed by me, as it gets economics in the news.

Our students should know two things. The first is that both Republicans and Democrats love big government, and have no desire to shrink it: see this excellent article by Reason Magazine. There is no evidence that Republicans desire a smaller government. They only prefer to pay for the big government through borrowing instead of taxes.

Second, while the tax burden in the U.S. is low compared to other countries, government spending is still a whopping 30% of total spending (see graph here). Most of this spending is for redistribution purposes. So you see, the U.S. is roughly 1/3 Socialist and 2/3 Capitalist.

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