The Economics of Politics

Negative Interest Rates? Really?
February 5, 2016
Japan’s Bond Yields and Political Adds: Both Negative!
February 9, 2016

Earlier today, the Wall Street Journal published an article about “Spain’s Socialists.” I was intrigued and took a look. It was the ‘socialist’ reference that hooked me: A word we’ve been hearing a lot more since Bernie “Feel the Bern” Sanders has been gaining traction in the presidential contest.

I’m sure if you are a ’50 something’ like me, the word ‘socialism’ is inherently negative. For me, it evokes memories of the ’60s, bomb shelters, and the Cold War.  Not one good memory.

If you visit Bernie’s website, however, he paints a very different picture than the one in my memories. Calling his vision an extension of FDRs, and coined ‘Democratic Socialism’, he suggests an America where health care is free, college is tuition-free, the ‘largest corporations’ pay their fair share of taxes, the government promotes full employment,  and ‘hedge fund managers’ pay their fair share of taxes.  From Bernie’s site:

“I believe that most Americans can pay lower taxes – if hedge fund managers who make billions manipulating the marketplace finally pay the taxes they should.”

Hmmm….

“…I believe today, is that true freedom does not occur without economic security.  People are not truly free when they are unable to feed their family. People are not truly free when they are unable to retire with dignity. People are not truly free when they are unemployed or underpaid or when they are exhausted by working long hours. People are not truly free when they have no health care.”

Hmmm….  Well, regardless, his general message is interesting, and reading it in its entirety, I find it intellectually stimulating – much more so, much more compelling, than his vitriolic tirades where he claims “the business model of Wall Street is fraud.”   He’s clearly a passionate guy and, perhaps, he’s gotten a bit carried away, in a Trump-esq sort of way.  But, regardless of whether or not I like the message, or the messenger, I was intrigued:  Are there successful, economically advanced, developed nations that do – in fact – cover the cost of medical care and college tuition for their citizens?   Here’s what I found.

Sweden, Norway, Finland and German – for the most part – offer tuition-free (or nearly free) college.  Austria is so cheap, by comparison to US tuition costs, it’s just about free.   Fascinating.

Healthcare is another interesting area.  Yep, the US is one of only a few developed nations where their citizens are not given healthcare.  (This is intended as a macroscopic observation; not a qualitative commentary.)

On the other hand, I wonder about the cost of such choices.  Here we are, a massive and successful country and economy, already running an annual deficit, and the economist in me is asking how these countries afford these costs.  Without going broke.

Tune in tomorrow … and we’ll talk about relative individual tax burdens and corporate tax rates.  Are individual tax burdens lower – and corporate tax rates higher – in Denmark, Sweden, Finland or Germany?   Let’s take a look.

 

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  1. […] Bernie “Feel the Bern” Sanders is a strong believer in the idea of free college – no tuition.   I covered some of his thoughts in a post I wrote back in February: https://terryliebman.wordpress.com/2016/02/08/the-economics-of-politics/ […]