Let’s continue analyzing Steve Roth’s handy compilation of leftist bromides, non sequiturs, self-congratulations, and just plain ol’ errors, “Why Welfare and Redistribution Saves Capitalism from Itself.”[i] The issue this series is addressing is: Did Roth accomplish his purpose to explain why welfare and redistribution saves capitalism from itself. (Discussions of other instructive aspects of the article can be found in PART I, PART II, PART III, PART IV and PART V.)
Roth opens his article identifying the members of “the rich country club” as the members of the OECD and then makes the following observation:
“In this measure, the richest countries all devote fifteen to thirty percent of GDP to social spending. As Bruce Bartlett pointed out recently, Germany — a darned “conservative” country that is thriving today, and which rode out our recent economic Great Whatever better than almost any other country. . . .”
First note that none of the OECD countries have pure market capitalist economies. On the contrary, as Roth asserts, they all engage in massive doses of redistribution, and universal government programs for social support and financial security.[ii] But the massiveness of redistribution varies significantly among the countries. They all, to varying kinds and degrees, have massive regulatory and tax regimes as well. Lastly, the countries vary significantly in the levels of corruption, cronyism and culture.[iii] Just how massively the countries interfere with free market behavior varies significantly on each of those variables.
To use the above fact to make the case that massive redistribution is saving capitalism (or what is left of capitalism after the massive redistributions, etc.) from itself, one must first tease out of this noisy data whether massive redistribution is the cause the success of these countries, or it is an effect of the success of their capitalism. If and only if Roth can show that massive redistribution is a cause rather than an effect of the economy’s success, can he logically proceed to make an argument that massive redistribution is saving capitalism from itself. Did he do that?
He’s got quite a bit of data with which to work. There are 35 member countries and very significant differences in the variables he deemed to be important and in their economic success. Does he show that the more massive the redistribution, the more economically successful these countries are? No. Does he present any other evidence that shows massive redistribution results in better outcomes? No. Is his table a fair representation of what is going on given that many of the countries in the OECD can engage in the amount of redistribution they do only because they freeload on America for most of their defense, funding of international organizations and relief efforts, cheap American drugs, and on American technological innovations? No. Does the single data point (anecdote) about Germany prove anything to make his case? No. Does he cite any study or other authority to support the idea that the happenstance of the massive redistributors being rich proves redistribution is the cause of their success? No. Does the observation that rich countries massively redistribute in any way support his claim that massive redistribution saves capitalism from itself? No.
So, with Roth’s facts and evidence we have discussed so far, one can only speculate whether massive redistribution is why capitalism can survive in those countries.
By using a Darwinian standard in an attempt to discredit those who would refute his claim, Roth must be suggesting that the emergence of massive redistribution in the most economically fit countries is somehow proof that redistribution is contributing to the fitness of those countries. Unless, however, he could show that massive redistribution is the only significant variable that enables capitalism to survive in these countries (and that the cumulative effect of the insignificant variables are not significant)—which he cannot and does not even attempt to do—then his conclusion is a non-sequitur. Here’s why: With the facts he presented, there is no way to determine whether the massive redistribution is adding or subtracting from the success the countries would have had with either more or less redistribution—or, conceivably, no government redistribution. (There will always be charitable redistribution whether or not there is government redistribution. Is it fair that he excluded charitable redistributions in his numbers? I think not.).
Then on the strength of this pile of speculation, his implicit suggestion is that evolution has selected the massive redistributive governments to be the fittest. I will readily grant Roth’s assertion that massive redistribution is an emergent phenomenon (evolutionary result), and is especially prevalent in rich countries. That fact, however, is a relatively recent phenomena (being employed in massive levels only over the last 50 years)[iv] and says little or nothing about whether evolution has ginned up a winning formula or one that will usher in the extinction of the wealth of OECD counties (or, at a minimum, much slower improvement in the standards of living of the poor in each country). Because history is repeat with evolutionary sorties that lead to extinction, suggesting that the emergent phenomena of an insufficiently uneducated public demanding (and therefore getting in democratic societies) massive redistribution proves nothing. More to the point, it does not prove that massive redistribution is saving capitalism from itself.
[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.
[ii] Technically he said that they had massive redistribution when they joined the club (I’ve already debunked that assertion in PART I) and Roth does not favor us with what he means by “massive.” Whatever it is, most, if not all, did not have massive redistribution when they joined the club, and most, if not all, have massive redistribution now.
[iv] The possible exceptions of Bismarck’s welfare state and The Great Depression disastrous economies—which included would fortify my argument. For good measure, I should also exclude the USSR, Mao’s China, North Korea, Cuba and the like.