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Some numbers to which the overrtaxed, overregulated 'bad business climate' crowd should respond

In his weekly "Fareed's Take" column, Fareed Zakaria of CNN and Time puts up some numbers that suggest that the righty analysis of what's wrong with the U.S. economy, and what needs to be done, might be seriously off track.

Look, I know there's a zillion (actually 1.03 zillion) ways to measure all this stuff and even more ways to assemble it into an argument, and we have a serious tendency to see the ones that seem to prove what we had already thought. But this batch certainly seems relevant and from reasonably reliable and pro-business sources like Bloomberg News and the Organization for Economic Cooperation and Development, which tracks the world's biggest economies. From the Zakaria column:

"One theory heard a lot these days is that the economy is burdened by excessive government regulation, interference and taxes. Cut them, the Republican candidates all say, and the economy will be unleashed. It's a compelling picture, but the data simply do not support it.

"The OECD released a study last week measuring tax revenue as a percentage of GDP. Of the 30 countries studied, the United States came in 27th. Taxes are low in historical terms as well — the lowest since the early 1950s.

"The Kauffman Foundation, which looks at the level of U.S. entre­pre­neur­ship, found that in 2010, 340 out of every 100,000 Americans started a business each month. That rate hasn’t changed much in the past few years; it is only slightly higher than in 2007, before the recession. Regarding regulations, Bloomberg News has crunched the numbers and found that the Obama administration has not reviewed or issued significantly more rules than its predecessors.

"Or look at competitiveness. The World Bank publishes a report that looks at 'Doing Business' across the globe. The U.S. ranks 4th in the world. The World Economic Forum does an annual ranking of overall economic competitiveness. The U.S. ranked fifth. In both these rankings, the countries that score higher are tiny places like Singapore and Finland, with populations often at 5% that of the United States.

"And these rankings have not slipped much over the last decade. So where has there been change? Where have we slipped?

"The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now we're 24th. U.S. air infrastructure has gone from 12th in the world to 31st — roads from eighth to 20th.

"The drop in human capital is even greater than the drop in physical capital. The United States used to have the world's largest percentage of college graduates. We're now number 14, according to the most recent OECD data, and American students routinely rank toward the bottom of the developed world in international tests."

The full column is here.

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Comments (38)

Eric, how could you post this? How many of the 30 high tax countries that were used to compare our taxes against are staring into the abyss of catastrophic ecenomic meltdown?

Do you realize that the Eurozone is about to become one the the biggest failures of cooperative economic ventures ever seen? And do you realize that taxation and entitlement spending are at the very core of their problems?

Honestly, guy...sometimes.

So increasing taxes and regulations will improve the business climate, is that it? mmmkay.

What's wrong with the US economy?

The artificial mountain of advantage of being the only intact surviving industrial power after WW2 has disappeared in the rising tides of the global economy, automation and computerization.

Where was it written that the US must remain with wages and benefits higher than the remainder of the world? The naive belief in American exceptionalism seems to run especially deep in economists who had most of the their theories developed in the post-WW2 boom times.

The fact is that you have the economy you are willing to pay for and can afford.

If you want to buy from the lowest cost producer, is it really surprising that your high-wage jobs disappear?

If the consumer is poorer every year, in respect to wages and accumulated wealth,, is it any wonder that the "greatest consumer economy" is suffering?

The fact is that the world is filled with people who can do everything that Americans can do. They have all of the tools and all of the education that were formerly the domain of Americans. And, perhaps, just perhaps, they have more of the desperate drive and will power to succeed that the complacent, formerly successful did.

That is the present and the future.

Ah, but that's just reality.
Not 'their' reality.

As usual, we can dismiss Mr. Tester, but I’d be interested in some supporting information – apples to apples, please – from Mr. Swift. While there ARE some Eurozone countries for which spending and taxation are issues, it’s not true across the board. I wouldn’t be surprised if that were the case for individual state economies in the U.S. – that is, there may well be states that don’t have tax issues, or that aren’t facing billion-dollar budget shortfalls.

Spending can certainly be a major problem if there’s no revenue to support it (see: George Bush and tax cuts), but in addition to the obvious remedy of cutting spending, there’s also the equally-obvious remedy of raising revenue to meet commitments.

In any case, Zakaria’s point is that the “over-regulation, over-taxed, uncertain climate” mantra of the business-worshiping right wing has no basis in fact, regardless of what happens to the Eurozone. The Obama administration has not placed some huge new regulatory burden on business. As business and the economy evolve, new regulations may be necessary to protect the public interest – that’s the rationale for ANY regulation – but there’s no evidence that some inordinate regulatory burden has recently been added to business activity in general, or even in most specifics. There’s no question that taxes, both individual and business, are at their lowest point since the Eisenhower administration of half a century ago. Whiners about business tax burdens, or the “huge burden” being place on the 1% are simply that – whiners. There’s no credibility in their claims.

As for certainty, it has never existed. Demands for “business certainty” are rooted in fantasy. You can’t have it both ways. There’s no reason to reward entrepreneurial activity if it actually involves no risk and thus no uncertainty. Uncertainty is part of everyday life for just about everyone.s The tornado that came through the North Side of Minneapolis last spring damaged many a small business. It exemplifies “uncertainty,” and government regulation and taxes had nothing to do with it.

We already have the most productive workforce on the planet, but it’s not doing the workers much good. Shareholders and CEOs are currently obsessed with return-on-investment (i.e., greed), so productivity is less important than wages – hence our “race to the bottom” spiral. I can’t say that I like what I read in Neal Rovick’s comment, but truth is often uncomfortable, and Neal’s take is not dramatically different from that of Jim Kunstler, who’s been saying similar things for a long time.

The "small" government deregulation plans never had much evidence to supports them. If they did we'd all under the shadow of Chile's giant economy. This was always a magic based ideology. The fact that so many Democrats and business people bought into it is a reflection of general economic ignorance, lazy thinking, high school debate pretending to be intellectual discourse, and anti-intellectualism in general. The fact that "evidence" based policy is being treated like a brave new idea is embarrassing.

It appears neither Swift nor Tester are able to respond. Wonder whether any of the more central right are able?

It's worth noticing that the areas in which we have slipped are those usually supported by public money -- infrastructure. Higher ed and tech-school education -- normally the best routes to good jobs-- is now out of reach for many young people and their families because it, too, is no longer adequately funded by government.

America is a great country for weapons manufacturers, private mercenaries who want to help with our several wars for more dollars than any plain soldier will ever see, bankers who play games with other peoples' money, drug makers and insurers who raise their prices every year without increasing value, and corporations with their own organization (ALEC) writing legislation beneficial to them and passing it in the states, including Minnesota.

Occupy has it right. America needs to rethink the way in which we create and fairly share wealth and, before the world burns up, address climate change.

It is a pathetic lapse in logic to think that the "glory days" of America can be recaptured with fewer taxes and regulations.

The "glory days" were made with steadily rising wages and benefits with ever increasing economic security across wide swaths of the population.

Falling wages, greater insecurity, more concentrated wealth, all are just fine with conservatives. Somewhat different than how America became great.

The issues are bigger than what can be handled with taxes and regulations.

The world has changed.

"in addition to the obvious remedy of cutting spending, there’s also the equally-obvious remedy of raising revenue to meet commitments..."

Tell that to Greece. They have proved that there is indeed a bottom to the public's pockets AND to the business sector's patience.

Italy and Spain are starting to realize the same thing.

Meanwhile we have low tax, business friendly Texas: "Dallas + Austin + Houston + San Antonio = 'Texas Miracle'"

http://www.theatlanticcities.com/jobs-and-economy/2011/09/dallas-austin-...

Apples for apples, how you like those?

There he goes again, Mr. Swift that is.

The usual strategy of the right wing is to make noises and point elsewhere when faced with our own economic and social problems. So we should just ignore the problems pointed out by Mr. Zakaria because there are economic problems in Europe?

If Mr. Swift were actually interested in an economic analysis of what is going on and how to fix it, I recommend:

Iceland’s recovery provides lessons for eurozone plans (link: http://bit.ly/w48iNc )

So put your head back in the sand, Swiftee. Ignore our problems. That message is not going to sell in 2012. See you at the voting booth.

"The "small" government deregulation plans never had much evidence to supports them."

In an allegedly free society, the inherent advantages of freedom shouldn't have to be explained. Even in a high school debate pretending to be intellectual discourse.

Lora, you should never take the absence of a conservative response as a sign of unwillingness.

Here on MinnPost, conservative responses live or die at the whim of the censor. I've never quite figured out the perfect recepie for getting my opinions past her, and that's not for lack of trying either.

That being said, I'm grateful to get whatever educational information out here that I can. I'm a happy helper.

"Higher ed and tech-school education -- normally the best routes to good jobs-- is now out of reach for many young people and their families because it, too, is no longer adequately funded by government."

You've got it exactly wrong, Bernice. Those things are now out of reach to too many people because of too much government subsidy. The more government has subsidized education, health care, and even technical schools, the more these institutions raise their prices because they know they can because government will pay the new higher cost without asking.

Engage in this little intellectual exercise, Bernice. Ask yourself what would happen to health care costs if tomorrow morning, all health insurance went away. Would the cost of health care go up? Or would it go down? If all Pell grants and government-backed college loans went away tomorrow, would next year's college tuition go up? Or would it go down?

(queue theme from jeopardy)

Mr. Swift, it's obvious that you've been getting your information about Greece from the right-wing media and not from fact-based sources. (Right-wingers tend to chant "Greece, Spain, Italy" as a mantra and quote Margaret Thatcher's "pretty soon you run out of other people's money," as justification for their views.)

Neither Greece's benefits nor tax rates are particularly high by European standards, but tax EVASION is a major problem, and enforcement is weak to non-existent. It's as if most of the population is sneaking in the back door at the movie theater or trying to get in for the children's price and no one is trying to stop them. Furthermore, Greece cooked its books in order to join the Eurozone and then let the banksters play gambling games with its economy.

Only those who let AM radio hosts and Fox News personalities do their thinking for them believe that Greece and the U.S. are in similar situations.

If our economy collapses, it will be for different reasons, namely overspending on the military, financial deregulation, and outflow of jobs to cheap labor countries.

A country can institute all the benefits it wants if the taxpayers pay for them, as they do in the Scandinavian countries. It's also worth noting that Norway has won praise from such conservative magazines as The Economist for stewardship of its oil revenues, as opposed to say, Britain, which not only tries to pretend that it's still a world power and therefore wastes billions on its military but also established itself as world headquarters for the banksters. Sweden faced a banking crisis similar to our own a few years ago and responded by nationalizing and cleaning up the banks.

As one of the adult contestants on "Are You Smarter Than a Fifth Grader" found out, Europe is not a country. It's a collection of about two dozen countries with very different cultures and economies.

Just chanting "Greece, Spain, Italy" doesn't prove a thing about the rest of Europe.

#9, I'm not at all convinced that the problems are too big to handle with taxes and regulations -- but to handle them we need to reverse the insanity of the last 30 or so years of re-regulate (Glass Steagel (sp)), and re-enforce (Sherman Antitrust) and start taxing in a way the rewards earned income more than it rewards speculation and US production and products more than it rewards Cchinese production and reimportation. We aren't and haven't been doing any of that and look where it's gotten us.

The current tax and trade systems reward the uber-large multi-nationals way beyond any benefit, in taxes or jobs, they provide to the US. Long past time for all those things to change.

Sorry #10 Swift. An analaysis of the "Texas Miracle" shows that 1) halve the jobs created were government jobs supported by the stimulus; and 2) with more low-wage, minimum wage jobs than any other state, Texas' unemployment rate is still higher than Massachussetts or New York.
http://www.washingtonpost.com/blogs/ezra-klein/post/breaking-down-rick-p...

Follow Iceland's example, eh Gleason?

Just let Greece, Italy and Spain go bankrupt; is that your considered solution?

*facepalm*

Sorry folks. I obviously need spell check on this thing.

Actually Karen, I get most of my news during the day from NPR...I have it on right now as a matter of fact.

NPR has been heavily covering the unfolding Eurozone disaster, and then we get a rehashing from the BBC.

Greece's tax evasion is well documented, and no doubt hasn't helped, but according to economists I've heard interviewed (yup, NPR again), the welfare state that exists in Greece would have overwhelmed a perfectly compliant tax system. The biggest problem, besides profligate spending is...wait for it Karen....*no jobs*.

Greece's public sector outweighs the private by 1/3. Now they can't afford to keep paying all those dedicated public employees, and the private sector has quietly moved to grener pastures.

And if you don't like Greece, explain Italy and Spain...two of the largest economies in Europe, going down the same tubes as Greece. There is great concern for France as well.

You answered your own question re: Norway...black gold, Karen and lots of it. Those rascally Norweigians are drillin' baby!

We'll see how well they fare without that bonanza in due time.

Oh and BTW, Karen.

I'd be remiss if I didn't point out the irony of country with a socialist majority government where tax evasion is a way of life....yeah, that's what "Happy to (have someone else) Pay" is all about when there isn't "someone else" around any more.

@#13--
Mr. Swift--
The easiest way to avoid being censored is to remove the invective and ad hominem arguments from your posts.

One of the parts of the recipe for getting posted on MinnPost, Mr. Swift is to leave your potty mouth at home? Given your posts elsewhere this must be hard for you. I'm sure MinnPost loves to have you and Mr. Tester on for balance. It is unfortunately difficult to find right wingers to post, so there is apparently a willing suspension of disbelief that logic is required.

It does get tiresome trying to get you to acknowledge facts though. I mentioned Iceland as an example and all you can say is "Spain and Greece." That's no real answer to an example of what can be done by a country that has faced an economic disaster and is making a remarkable recovery. And they didn't do it by cutting taxes so that the job creators would kick the economy into high gear. You really do not have any suggestions other than doing nothing. This answer will not work in 2012. Nor will a Trojan horse full of the right wing social agenda - as happened in the last state wide election.

But you apparently don't want to face the facts. Carry on.

A little inflation is not something to be scared of right now. In fact it might just be the tonic for lower mediteranian (sp?) countries. Please discuss.

"In an allegedly free society, the inherent advantages of freedom shouldn't have to be explained."

Perhaps not. But, the definition of and limits to freedom, however, need to be defined to have any meaning. I have to assume, Mr. Tester, that being an avowed Gingrich supporter as opposed to a Paul fan, you accept that freedom isn't free, that each right carries with it responsibilities, and that "freedom" on an individual level is neither limitless nor divorced from the other individuals and the broader society which supports it.

Why can’t we just raise taxes on the rich and redistribute these funds to the Obama special interest groups?

It will not grow the economy but it will sure increase Obama’s campaign funding.

Thanks Eric.

As you said and as the comments demonstrate or at least some people will make up their own story. Facts are good to work with if the mind is willing.

Inflation can be good for labor.

@ Dan,
I choose default.

Inflation penalizes the ants (savers), and rewards the grasshoppers (borrower and spenders).

@ Tom's 1 & 10

I guess we in the US don't have to worry.

Our gov't does tax cuts and over spend.

Watch out, Dan, or the inflation hawks 'll getcha!

"In an allegedly free society, the inherent advantages of freedom shouldn't have to be explained."

In other words "truthiness" does not need to be backed up by pesky facts.

@ 30,
Paul, I'm talking about the little guy that saves vs. the little guy that borrows and spends.

You know, the guy that lives "credit card payment to credit card payment".

Good thing that today most money is electronic 1's and 0's, else we'd have to cut down more forests or worry about the printing presses breaking down.

The predictable denialism came out. It's just as bad in economics as it is in history or the physical sciences. This was a very telling remark, "In an allegedly free society, the inherent advantages of freedom shouldn't have to be explained. Even in a high school debate pretending to be intellectual discourse."

Wow. Label your ideology "freedom", and suddenly you should be free from having to explain it. It's like presenting contradictory facts is a moral wrong.

What's so difficult to understand, Eric?

Whenever government passes a new law or creates a new regulation it gives itself more power and leaves you with less freedom.

It's not ideology, it's algebra.

@#32--
Richard--
I was replying somewhat facetiously (always dangerous here) to Dan's statement about inflation.
You might want to check out what Paul Krugman says about the need for a small amount of immediate inflation to kick start the economy.
He definitely does not recommend inflation as a permanent strategy.

Krugman has always had this problem of not being able to distinguish between cause and effect, hasn't he.

I think you may be oversimplyfying here.

The whole field of economics is about correlation, not causation, and post hoc to boot.