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February 13, 2007 Stealing the Future - The Cost of Compulsory Economic Rights |
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In response to a paper about the United
States adopting "economic rights," like those
adopted by many European countries.
I think that you did a good job of covering this topic. Let me just throw a couple of big picture things out to think about. First, the concept of what we mean by a “right” is important. Traditionally, the concept of a right, like free speech means that someone (normally the government) cannot use force against you to make you do something or to make you refrain from doing something, Notice, it is a protection from the use of force on the individual. However, this concept is very different in the context of socialism, where the goal is to guarantee equal results rather than equal opportunity. In this context, force must be applied to someone to ensure equal results. In this context, force is applied either to employers to force them to pay for additional maternity leave benefits, or it is applied to taxpayers generally to force them to pay for these additional benefits. In direct contrast, rights is this context are not freedom from the use of force but the application of force to take something from one person and make them give it to someone else (directly or indirectly). Second, consider the economic implications of these types of policies. Contracts in a free market are voluntary agreements. When an agreement is voluntary, both sides to the agreement only agree when they each believe that they will be better off entering the agreement than not entering the agreement. This allows for win-win situations that result in a net increase in wealth as a result. However, the application of force into the equation means either win-lose situations or the avoidance of entering agreements, and thus a reduction in economic activity and a reduction in the creation of wealth. Since the end of WWII, the US has average 3.4% growth per year. In recent years this rate has remained fairly constant. Many EU countries, like France and Germany, average closer to 1% growth per year, largely as a result of their willingness to reduce the voluntary portions of their economies in exchange for more compulsory institutions. The difference between 1% and 3.4% growth compounded year after year are staggering.
Looking out nearly 50 years, the difference in the size of the US economy if it were to grow at 1% instead of continuing to grow at 3.4% is nearly $60 trillion per year in today’s dollars. In other words the difference alone is more than 4 times the size of the current gross national product of the United States. In fact, it is roughly the size of the GDP of the entire planet. My point is, when you start adopting policies that slow the rate of economic growth, you may not see a significant difference this year or the next. But, you are steeling the future away from your children and grandchildren.
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