Quote Of The Day

“Here’s the $64 dollar question for which I’ve never seen progressives provide a satisfactory answer.  Why is per capita GDP in Western Europe so much lower than in the US?  Mankiw seems to imply that high tax rates may be one of the reasons.  I don’t know if that’s the answer, but if it’s not my hunch is that the factors that would explain the difference are other government policies that the left tends to favor (strong unions, higher minimum wages, more regulation, generous unemployment insurance, etc.)  So I think Mankiw is saying that if we adopt the European model, there really isn’t a lot of evidence that we’d end up with any more revenue than we have right now.  Further evidence for this hypothesis is that the few developed countries that do have much lower tax rates than the US (Hong Kong and Singapore) now have much higher per capita GDPs (PPP) than Western Europe.  Yes, they are small and urban, but Western Europe is full of small countries of about 6 million people that have less than 5% of the population in farming.”  — Scott Sumner, professor of economics at Bentley University, discussing a post by Mankiw that Yglesias responded to

12 Responses to “Quote Of The Day”

  1. Jon says:

    I haven’t studied these subjects in enough depth, but I have a vague sense of some of the causes. After WWII the United States possessed 6% of the world’s population and 50% of the world’s wealth. State department planners understood this and were determined to maintain that balance. So they structured a global economic order that continues to provide the U.S. with these advantages.

    State violence, requested by our corporations, has resulted in enormous profits for U.S. businesses. Go back to the United Fruit Company in Guatemala. You have a country not selling out the population for the interests of U.S. corporations? No problem. Portray them as communist and smash them. Edward Bernays, the father of public relations, got that one done. Worked pretty well, so it has been repeated as necessary for dozens of additional countries. Europe doesn’t have those advantages these days. Though they’d done it in the past and in those cases (such as the Belgian Congo) without even a pretense of benevolent ambitions. Basically we want money, so we’re going to kill everyone. You can’t be so blatant about it today. You have to pretend you have good intentions. But this made Europe rich as it makes the U.S. rich today.

  2. Like the war in Iraq – were making a killing off of that investment. ;_)

  3. Jon says:

    Yes we are. The few trillion in costs pale next to the multiple trillions in resources that are now under our control. And remember the key is not just to have them so you can use them, but to control them. George Kennan, a head of State Department planning, said that control of Middle East oil gives the United States “veto power” over the interests of foreign nations. It’s a tremendous economic advantage. Kennan said this even when North America was a net oil exporter. It’s not that we need the oil. We need to control the oil which is so vital to everyone else. We have our hand on the spigot. Others have no choice but to comply with our demands or we can strangle them.

  4. LaurenceB says:

    I understand where you’re coming from, and historically, you’re on pretty solid ground. The U.S. interventions in Guatemala and Chile and elsewhere were definitely motivated by a certain amount of economic imperialism. But I don’t think I completely buy the application of this template to the war in Iraq.

    Nobody was more against the Iraq War than I was, but I think there were plenty of good reasons to oppose it that made more sense than this one does.

    Just my two cents.

  5. Jon says:

    I’m not sure what you mean, LawrenceB. Are you saying that this was was not about control of resources? If not, what was it about? It’s not about freeing people from oppression. If you want to relieve suffering and oppression there are plenty of other targets. How many millions are dead in Africa over the last year?

    It’s worth remembering what the Bush administration thought this was really about at the time. Here’s are some comments from one of his press conferences.

    “In New York tomorrow, the United Nations Security Council will receive an update from the chief weapons inspector. The world needs him to answer a single question: Has the Iraqi regime fully and unconditionally disarmed as required by Resolution 1441 or has it not?”

    “We are determined to confront threats wherever they arise. I will not leave the American people at the mercy of the Iraqi dictator and his weapons.”

    Here’s Colin Powell:

    “. . . Let me put the question to you directly and clearly in the simplest terms that I can. The question simply is: has Saddam Hussein made a strategic, political decision to comply with the United Nations Security Council resolutions? Has he made a strategic, political decision to get rid of his weapons of mass destruction? That’s it in a nutshell. The question is not how much more time should be allowed for inspections. The question is not how many more inspectors should be sent in. The question simply is: has Saddam Hussein made a strategic decision, a political decision, that he will give up these horrible weapons of mass destruction and stop what he’s been doing for all these many years? That’s the question. There is no other question.”

    Here’s The New York Times quoting White House Spokesman Ari Fleischer.

    “We have high confidence that they have weapons of mass destruction,” said the White House spokesman, Ari Fleischer. ”This is what this war was about and is about. And we have high confidence it will be found.”

    It’s not just the position of the US, but also Britain. Here’s Jack Straw:

    “The position of the British government is very straightforward. Yes, of course, in a different world we would like to see a different government running Iraq but so far as 1441 is concerned, the purpose of 1441 is to secure the disarmament of Iraq’s weapons of mass destruction.

    That, and that alone, we have made it clear, the British Prime Minister Tony Blair has made clear repeatedly, that if Iraq complies with 1441 and disarms of its weapons of mass destruction, we accept that the government of Iraq stays in place and let us make that clear and that has always been clear. Saddam Hussein has known that.”

    Well, obviously that isn’t right any more. What is it now? Democracy promotion? Is the fact that Iraq has the highest quality and easily accessible untapped oil reserves a mere coincidence?

  6. Jon says:

    LaurenceB, I wrote a question for you, but it awaits approval from HP. I think it may have had too many links so it was blocked. Anyway, what it amounted to was I’m not sure if you are saying that you don’t think we invaded for economic reasons. Is that right?

    I pointed out also that it’s worth noting what the reasons were at the time. I posted that at my own blog here:


    It’s also worth considering what Iraqi’s themselves think. If it wasn’t for the obvious reason (reflected in the poll of Iraqi’s below) what do you think it was?


  7. Sorry Jon, not sure why your post was flagged for spam…damn spam filter!

    Anyway, its recovered now.

  8. LaurenceB says:

    I’m guessing of course, but I’m going to say the “real” reasons (meaning Bush/Cheney/Rumsfeld) were, in order:

    1. Strategic interests in the region. (Protection for Israel, and the governments of Saudi Arabia, Jordan, Kuwait, etc.)
    2. WMD
    3. A general, irrational, feeling of post-9/11 revenge (most often expressed in anti-terror themes).
    4. Leftover animosity from the first Iraq War. “He tried to kill my Daddy”.
    5. Control over oil supply lines. (Preventing their potential disruption).

    So, I guess I agree that the war was partially due to oil interests, but I wouldn’t say it was primarily due to oil interests. But again, that’s just my take. I could easily be wrong.

  9. Jon says:

    More on the causes of the war. Here’s Zbignew Brzezinski, a war opponent, still acknowledging the usefulness of the war in that it gives us “critical leverage” against European and Asian economies in that we control the oil

    Yet American and Israeli interests in the region are not entirely congruent. America has major strategic and economic interests in the Middle East that are dictated by the region’s vast energy supplies. Not only does America benefit economically from the relatively low costs of Middle Eastern oil, but America’s security role in the region gives it indirect but politically critical leverage on the European and Asian economies that are also dependent on energy exports from the region.

  10. Jon says:

    LaurenceB, of course there may have been multiple reasons for the invasion, though the claim at the time was it was all about a “single question” which was WMD’s. Your first reason with regards to the “strategic interest” means the oil interest, right? So I’m not sure we disagree. There can be many reasons, but the top reason recognized by the Iraqi people is perhaps the main one. Oil. I think this forms part of the answer to HP’s question.

  11. LaurenceB says:

    Hi Jon,

    My off-the-cuff analysis wasn’t really meant to reflect what Iraqis felt were the main causes of the war, nor was it meant to portray the Bush Administration’s stated reasons for the war. I only meant to give my own view of what I think were the Administration’s actual reasons for the war.

    And, yes I think we mostly agree – oil definitely played a part. Though not in the sense that the U.S. or U.S. corporations wanted to profit from Iraqi oil wells, but rather in the sense that we didn’t want to see the flow interrupted in any way.

    In that way, the Iraq War was a bit different (and a bit less mercenary) than the disgraceful intervention in Guatemala – the principal motivation of which seems likely to have been to preserve American commercial interests in that country.

    And so that was the thinking behind my original comment on this subject.

    By the way, I’m impressed with how you take the time to look up supporting links for your arguments. I wish I had that much initiative/energy/brainpower.

  12. Jon says:

    Well, I get the house to myself this week with the wife and kids on vacation without me, so I got a little extra time, which I’ve been using to look up obscure quotes, watch documentaries, etc. Even work out.

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