Sunday, October 19, 2008

A simple way to look at socialism compared to USA capitalism.

A simple way to look at socialism compared to USA capitalism.

A non-scientific and very simple way to compare the impact of socialism by comparing nominal GDP, labor force and population of various countries. In my analysis I compare GDP (Gross Domestic Product), Population and Labor force between United States and 6 socialist countries. The choices were arbitrary but since we are always hearing France and Sweden are the models of socialism that work, I started researching there. I have included three of our most liberal states in the mix since they all have a lot of socialistic type programs and they are either failing or threatening to bankrupt the states. The states are California, Massachusetts and Hawaii.

I compare at a very high level the United States to China, Cuba, France, Norway, Sweden and Venezuela.

The following table defines the columns used in the following tables. I apologize in advance for the poor quality of the images - I was not able to covert my analysis document properly to html so I made image files out of my tables.

When you first compare the GDP per population and worker Norway really stands out as an excellent example of value. Two key elements of Norway to remember they are ranked 11th for QOL and they are basically the population size of Massachusetts. I have always thought that one of the biggest problems of socialism is the ability to scale to the size of the United States and to keep people incentivized to be productive and eager to succeed. When you look at how poorly China, Venezuela and Cuba are doing in regard to GDP and their QOL of standing it makes you wonder why they continue on their path.

France is an interesting example because on a comparison of GDP per worker they are on par with the USA and are 1 point ahead of us in QOL however when socialism is concerned it is more accurate to compare GDP to the total population since you have to take care of everybody. Once you do that then France takes a 16% hit on their GDP performance as compared to the USA. Additionally there population is twice that of California. When you compare California to France you start to see a bigger difference. Even though California is 50% the size in population to France when you look at the GDP between the two France is ranked 6th and if California were a country it would be 8th.

If our GDP was determined by France's GDP performance instead of having $13+ trillion in GDP we would be producing $11+ trillion. We would still be #1 in GDP however with our current deficits how would we ever make up an additional $2 trillion dollars?

If we would be able to scale Sweden or Norway there is a chance to increase our GDP under socialism however it is important to note that Sweden is 27th for QOL and Norway is 11th. Given the definite possibility that socialism cannot scale and cost to us all personally to have our QOL impacted so directly it probably just isn’t worth it.

As expected Sweden and Norway take a hit but that startling difference if China, Venezuela and Cuba adopted a capitalist approach to their markets it really gives you a sense in regard to China just how powerful they could become if they dumped their Communist ways. I think it is important to understand that socialism is the next step on the way to Communism so you can see the impact to our GDP if we move closer to a Euro-Socialist society like France and then ultimately into Communism.

This view is very simplistic but it gives you a bird’s eye view to the differences in GDP and QOL. If we had to scrap $2 trillion in our GDP to pick up 1 point in QOL to tie France, I think we all know the answer to that.

As we look at our upcoming election we have a clear choice. Do we move to a more tax intensive and blank check spending mentality we the Obama team takes us closer to a Euro-Socialist way of life or do we look to the McCain team to first fix what is broken on E Capitol Street and Wall-Street?

With this historic opportunity for the citizens of our great nation to affect change we could also push a McCain administration to seriously look at the FairTax proposal. It would be the greatest shift of power from our Government back to our people it would have a very dramatic effect on our GDP and economy as a whole.

One of most dramatic impacts of FairTax would be directly on our GDP. Our GDP would grow to a strong $23+ trillion dollar value that is a $9+ trillion dollar increase over our current GDP that is practically the entire deficit! We would be on par with Norway’s performance but with 6100% more population, we would be #1 QOL and #1 for businesses world-wide. This is what you call a no-brainer.

The choice is clear you have to pull the lever for McCain and then we all need to push the FairTax!

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