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Friday, February 27, 2004

Getting it out of my system

Following a very long discussion last night I feel it necessary to point out to the world at large (not that it's reading) that.

The populations of Holland and NY State are similar.

The crime rates however are not. According to this Home Office Report (pdf download). Dutch police recorded just over 1m crimes in 1990, and just under 1.2m crimes in 2000. Included were around 230 murders a year.

While not exactly comparable this US Bureau of Justice Report notes that the murder and non-negligent manslaughter rate combined in New York dropped from over 2600 in 1990 to just under 1000 in 2000. A massive drop to be sure, but still about four times more dangerous than Holland in 2000.

The report also lists absolute totals for a number of offences. These too look broadly comparable when you sum the American ones and compare them with the Dutch. However... The US numbers exclude a vast range of non-violent crimes including drug related offences (possession, dealing etc). In absence of these figures its hard to say how much worse things are in NY state than the Kingdom of the Netherlands, but its certainly fair to say that NY is not somewhere with half the crime rate of Holland and given what I know about the place almost certainly spends much more money on crime prevention.

Moving on...

The US govt spends around 30% of national GDP and this has been increasing ever since the massive state spending required by WWII was abandoned. A good graph based on US national statistics is here. The rise seems to be about 0.25%. That said the level fell during the Clinton boom and rose during the Reagan one, I'm not sure there's much point trying to get anymore out of the numbers than a general upward trend.

This paper from the University of Florida looks at the correlations between the size of government and growth in GDP. Useful is a review of literature at the start which shows a debate evolving from a position of 'big government is unambigously bad' to a position of 'big government may be bad' to the rather interesting 'most governments are about the right size'. The authors of the paper in question think that state investment is good, but state consumption can be bad.

After much much much looking I found on the OECD website this spreadsheet looking at government spending as a percentage of GDP. At first glance the evidence is mixed to say the least. The long booms of Ireland and Portugal have been accompanied by a shrinking state (but you could argue they were sparked by a comparatively large one), while the equally spectacular boom in Korea has seen the state grow by more than 50% to just under 30% of GDP (which you could argue was facilitated by a small one).

Meanwhile the Dutch do have a big state (48%) but its not spectacularly large compared to places like Austria (51%), Denmark (56%) or Sweden (58%). Its also a lot smaller than it was in 1986 when the data starts (57%), and its about average for the EU. Perhaps Hollands current stagnation requires a good Keynesian shot in the arm.

Japan and America have similar sized states over the 20 year period covered, and enjoyed wildly different fortunes.

Cutting the size of the state might lead to economic growth, then again so might state investment, public works programs and the like. Is the state more efficient than companies? Well that's a long long long argument, but the growing discussions about missing markets and the like suggest that some things need state intervention if they're going to work properly, and it would be a fairly rabid right winger who'd suggest that universal unemployment benefit be replaced with unemployment insurance. (Take a look at the line at the dole queue, someone's going to insure the folks who've been there 20 years on the offchance they find a job and can pay premiums? - yeah right...)

Finally, this from the World Bank has statistics on India and China's state GDP as well as a general discussion of state size and it's fairly critical of centralised state spending. It was written before current reform attempts with 'third way' economics and the like. This on the other hand explains just how much it sucks to be poor in India where the state is small.

How much future prosperity should we forgoe to relieve present poverty? Is that really a ridiculous question?

Anyway, I feel much calmer now, and somewhat relieved that my worldview is more or less intact. Must be time to do some work.

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