The Rahn Curve and the Growth-Maximizing Level of Government

[Spjungen]

Wow this is interesting, I'd heard of the laffer curve but never the rahn curve...

[rictorn]

stupicd capitalists name there think tank after burt qwarks carictor in the pink panther

[Spjungen]

@rictorn I love how socialist dickwits like you can't spell xD

Idiot

[rictorn]

@Spjungen hello, nice of you to take an interest, i would love to talk about the issues, and i shall do my best on the spelling,

[lmt61251]

@UBSCARED you're smoking crack. Reagan never raised taxes, but the Democrat Congress did, after promising Reagan they'd reduce them. Figures.  Maybe you'll recall Reagan's OPM Director Don Devine. He got the same treatment as Walker's getting in Wisconsin from the Left's precious government unions. So trying to overcome the growth of government, stymied again by the socialists. Socialist hate this country so much they're willing to do anything to bring it down. Are you one of them?

[DystopianUtopia]

@lmt61251

Stop sucking Reagan's dick and stop blaming the Democrats for EVERYTHING you perceive to be bad that happened under Reagan. He had the power of veto. He also spent ridiculous amounts on the military (and ran up the debt 2xas a % of GDP) and incited much the hatred that is directed at the US today. He also massively expanded the failure of modern prohibition we call the War on Drugs. He was also the most protectionist president since Hoover.

He was no friend of liberty, are you?

[lmt61251]

@DystopianUtopia Trolls are into defending massive govt. Bottom line: defense spending as a portion of the overall size of the economy (% of GDP) is historically low, while spending on social programs is at all time highs. We won the Cold War because of Reagan, and spending was never close to all time highs when he was prez. Socialism is sucking out our souls, not to mention denying liberty. If NORML is your cause, feel free to promote it.

[SuperSneakySteve]

That guy looks like a pirate ARRRRRRR!

[lmt61251]

Reagan said government was not the solution, but rather it was the problem. Since 1988 it's gone past this point. Now it's the enemy.

[Dweepnes]

lol i only now noticed that rahn curve prooved that communism fails

[kborerr]

What a pathetic attempt to justify taxation. The Rahn curve is fear mongering, just like the global warming "hockey stick" graph.

The unprincipled appeal for slightly lower taxes masks the key message of this video: "Without government, there would be no protection of private property." This is refuted by experience, unless you've never seen a private security guard... or a bike lock... or a girl carrying pepper spray... or an alarm system on a house...

[KagarBeardtooth]

You Cato idiots need to wise-up. There is no correlation between statelessness and chaos.

[CatoELYounger]

Great video!! You guys do really good job! Keep it up!

[somercet1]

*sigh*

[TheAlteredNatives]

sounds better with that vuvuzela button on....I hate politics...

[DOHC2L]

The only economic arguments liberals believe are the ones they can manipulate to substantiate their socialist agendas! Excellent video, and a great example of how to argue for conservative principles nowadays.

[Truthpolice9698]

I can't believe the hits on this video! Good job afq2007!

[znirich]

Dan Mitchell always does a great job

[yakyakyak69]

The Bill of Rights including the 9th and 10th Amendments specifically limit federal reach and power under both the vague Commerce and General Welfare clauses.

Vague requires interpretation. Interpretation always leads to tyranny because power naturally concentrates and corrupts.

We MUST defend our Constitutionally limited governmental model from ALL enemies both Foreign AND Congressional! (presidential and judicial too)

[TheLegalImmigrant05]

@yakyakyak69 "Vague requires interpretation. Interpretation always leads to tyranny because power naturally concentrates and corrupts."

Amen!!!

[yakyakyak69]

@TheLegalImmigrant05

I wanted to use the word "Ambiguity" but since the progressives have forced so many into union controlled state dumb-down centers, I decided that the word "vague" was easier for most people to understand.

The real danger here is that power concentrates and corrupts and that is why socialism is so very dangerous while FREE capitalism and FREE competition WITHOUT crony-corporatist influence via Keynesian macroeconomic central planning. Honor the 10th or face the 2nd.

[VerbotenDingleberry]

If the people we allow to vote were smart enough to understand this we wouldn't be in this mess.

"We have met the enemy and he is us." - Pogo

[wetweasel56]

The biggest stimulation to the economy is lower taxes on people and business. Dems are for big government and higher taxes and Repubs are for smaller gov. and lower taxes.

You decide which you want in Nov. but you have to live with it.

[ExhibitMan]

Good video, good explanation and a big thanks!

[aldoreshgaramok]

fantastic video

thanks for uploading

subbed

[kmg4]

Women being allowed to vote = big government.

[yakyakyak69]

@kmg4 Allowing those who are on the receiving end of redistribution to vote for themeslves MORE of that readistribution leads to big gov't and poverty for all but the politicial and banking classes.

Pay taxes? Good, you can vote.

On the public dole? OK, you can vote when you get OFF the backs of others.

[calstategop]

@kmg4 You have never heard of Phyllis Schalfly I take it.

[kmg4]

@calstategop ONE Phyllis Schalfly does nothing againsts thousands of extreme feminists who have instituted the new equivalent of Jim Crow.

Republicans support any and all leftism as long as it is packaged as 'chivalry'. This is a fact, and why a Republican winning an election is nothing to be excited about.

[suedeslounge]

I disagree with this curve.

The left side of the curve is bogus.

It should be a straight line.

The right size of government taxation is zero.

[JohnBigBootay]

The governments removal of cash from the private sector is enough by itself to destderoy an economy. These fools in Washington, mostly democrats but most assuredly bi partisan, are systematically destroying the goose that laid the golden egg, just to get re elected, and the funny thing is that they wont get reelected if they keep fucking everything up at the rate they have. Anybody who paid attention during a basic level econ clas would know that.

Fuck off socialist and communist

[timbosforporn]

I have to agree a lot with this video. It just makes sense that the more government spends the less money the private sector has to invest and grow. Its no coincidence that we had a large economic growth in the late 90s just because we cut govt spending and balanced the budget. When we stopped doing that the economic growth existed but wasn't as explosive as before. I wonder what would happen if we cut govt spending by half in the next year or so.

[riethc]

This is still a bit simplistic. Right now the gov't should be investing in infrastructure; nuclear power, high-speed rail, scientific investigation, etc.

I don't know where that would be on the curve but we got to start using new sources of energy and start becoming more efficient. And no, Green is not the answer.

[timbosforporn]

@riethc The question is is not if it is simplistic but if it is false. It is easy to tell that as the sun rises it gets hotter during the day. It is a simple observation and is true and its lack of complexity does not negate its accuracy. So what difference does it make if the explanation is simple or not?

[riethc]

@timbosforporn What I'm saying is that the Rahn curve does have a point about gov't spending, that too much of it hinders private industry. That is a true and simple statement. If that is all his platform for economics is based upon, it is simplistic.

[Slipknotyk06]

@riethc - I couldn't disagree with you more

What you're calling for is in essence a modern day "New Deal" which didn't work in the 30s and won't work now. Plus, it puts people out of work, and is expensive. The way to revitalize the American economy is to do the reverse of what you call for: deregulate, and cut spending. In relation to the curve, you would be Spain, which on both the Laffer and Rahn curves is are spending and taxing in a way to be vastly damaging to their own economy.

[riethc]

@Slipknotyk06 Look at the real, physical economy. The USA needs to move forward with technology and infrastructure to get out of the downward spiral we've been in. The financial bubbles of the past three decades or so have simply covered up for the fact that the nation has physically been deteriorating and what there is has been becoming outdated.

Look at the deterioration of our rail systems, for instance. It's simple enough if you google it.

[Slipknotyk06]

@riethc - I believe that deregulation (especially for rail) large-scale deunionization (especially for rail) would be able to create a better solution than government spending in these areas. Plus, we need to break up monopolies, and I believe that Amtrak needs to die, and the free market needs to take its rightful place.

Also, you seem to forget America doesn't run very much shipping by train, as it does far more by road.

[riethc]

@Slipknotyk06 The fact that we ship so much by road is a large part of the inefficiency problem. Between the fuel inefficiency of semis, the need for continual road maintenance, and the slower speed of shipping by road proves this.

[Slipknotyk06]

@riethc - actually, goods get across the country, typically faster by truck than by train.

The thing with rail transportation, and I significantly researched this, is it has significant red tape. In order to build city-to-city rail lines, you first must conduct about 10 studies, to include cost-benefit analysis, environmental impact, etc. Then, you go through design and initial planning, then you contract it out. All railway workers are union, making construction hugely expensive here.

[Slipknotyk06]

@riethc - Also, Amtrak is the government-controlled railway entity. This company needs to have its monopoly eliminated, and be allowed to collapse into bankruptcy. This company is horribly antiquated, and hugely expensive because of its Union workers in conjunction with Government inefficiency.

[DonMeaker]

@riethc Infrastructure: Does not mean government owned, or government produced. More effective infrastructure is often privately owned, such as the Ford and GM factories that produced massive quantities of military equipment during WWII. How do you think such infrastructure compared to the government owned factories at Springfield Arsenal?

[riethc]

@DonMeaker There's nothing wrong with some gov't contracting. What I'm talking about is infrastructure building; electrical plants, transportation, water supplies, etc. A tank isn't infrastructure.

[DonMeaker]

@riethc A tank manufacturing plant could be. The difference: If built by the government, there is little concern with efficiency, economy, or quality. If built by a private party with a need to compete, there is much concern with efficiency, economy and quality. Private electrical plants, private transportation networks, private water supplies will be efficient, being spent with cat 1 and 3 money. Government money is always Cat 4, less efficient.

[riethc]

@DonMeaker Many corporations are inefficient. Many gov't programs are inefficient. The difference is if a corporation is inefficient, it usually goes out of business. With a gov't program it has to be defunded or simply removed.

It's just typical conserva-crap you're telling me, indoctrinated through years of corporations telling you how great they are.

[DonMeaker]

@riethc There is another difference. Corporations are voluntary. if you don't want to, you can do business with another corporation. Buy a Mac instead of dealing with microsoft. Crucial to the nature of government is the power to coerce. Unions seem to aspire to quasigovernment authority, threatening violence to people who wish nothing more than deal with the competition.

[riethc]

@DonMeaker You're looking at the best of what corporations have to offer and the worst of what gov't has to offer. I'm not going to waste my time with loaded arguments.

[DonMeaker]

@riethc That is rather the point. The government always wants to take things over with a loaded argument. Private enterprise always argues efficiency, freedom, and lower cost. Government says "That isn't fair!". Whiner.

[riethc]

@DonMeaker lol, Clearly your unbiased opinion coming forth.

[DonMeaker]

@riethc Rather biased, from years of study. Look up the British Airship experiment, if you need a lovely anecdotal story or two.

[Slipknotyk06]

@riethc - and you assume that government is always great an the free market is evil? Are you on Stalin's Propagandist Machine? Please, this is not a loaded argument.

Keynes has been thoroughly discredited, and the excuse for big government is following him. You're arguing for big government, and not accepting exactly what this video stated.

[riethc]

@Slipknotyk06 I'm arguing for new infrastructure if you forgot.

Listen, just forget I ever said anything. Find someone who wants to talk about the "self-correcting beauty" of the free market. They might has some nice graphs to show you too.

[DonMeaker]

@riethc The market is ugly rather often. Hardly ever does it have mounds of corpses. No profit in that.

[Slipknotyk06]

@riethc - I'm arguing that new infrastructure is best done through the open market rather than the Government because of how jacked up regulations have made the process.

[Slipknotyk06]

@riethc - The Government inefficiency rating is 87%! The average corporate inefficiency rating is less than 20%. There is a reason for this.

When a corporation trims excess cost, it impacts profit margin, and therefore makes your shareholders happy, and keeping them adding to your revenue stream through investing in your company.

The government clearly is not worried about inefficiencies, or else the budget for Medicaid/Medicare wouldn't be 3.5 Trillion for 755 Billion of paid out benefits.

[riethc]

@Slipknotyk06 That's a nice statistic. 87% vs. 20%. Where'd you pull that out of?

I'm not going to convert you. You're stuck thinking one way.

[Slipknotyk06]

@riethc - It's typical with the government, in most welfare programs, the bureaucratic oversight is so invasive and inefficient that typically the budget is 8x what is paid out.

Infrastructure programs are the same way because there are thousands of pages of legislation for every single little step in creating infrastructure from planning processes to appropriations to contracting to labor to materials. Everything is overregulated, and could be done better for cheaper under the open market.

[DonMeaker]

@riethc And you are stuck not thinking. Sucks to be you.

[riethc]

@DonMeaker Cute.

[Sluttybags]

Anyone have a resource for where Canada sits on this curve? A lot of these kinds of studies always leave Canada out :(

[rightisright76]

@Sluttybags Canada is often left out because it doesn't really count, due to lack of a sustainable level of military spending. Canada is the USA's b1tch from a military perspective and Canada has rightly assumed no need to really protect itself or provide the ability to project power globally since it can rest assured that any threat against it will be met with the full force of the US.

[DonMeaker]

@Sluttybags Take a look at the CIA world fact book.

[DonMeaker]

@Sluttybags Per CIA WFB Canada spending is 547 billion, with GDP (purchasing power adjusted) 1.285 billion. That is about 23 percent...

[etjester]

Dan, just run for office already.

[a4finger]

good video

[freesk8]

Wow. Great video!!!!

Yay, Cato!

[airborne373]

Wake up America. We are at war with our own govt. Or more accurately our govt. has declared war on us.

[aaron0883]

I like how they throw in a well dressed pirate at the end to fancy up the graph. It is like a little reward for watching the whole video.

[DystopianUtopia]

@aaron0883

He has an eye patch because you his sight, insensitive twat.

[DystopianUtopia]

The Rahn curve is a bit stupid. The level of gov't spending that maximizes economic performance is whatever is enough the secure the rule of law, property rights and sound monetary policy, that amount will vary from country to country. It is not a fixed percentage of GDP that will provide this.

[TCoop6231]

@DystopianUtopia Even if it varies a little between countries, we aren't likely to see a growth maximizing government at 50% of GDP or more. If you look at any example of countries where government spending accounts for the majority of GDP, growth is always lagging behind its less taxed neighbors.

[DystopianUtopia]

@TCoop6231

I completely agree. And it doesn't require 50% of GDP to fund the police, military, courts and prisons, including the general admin that goes with it. When government keeps itself only to those functions, that will be the point where growth is maximized. Here in the UK, our public sector makes up a whopping 49% of GDP, yet our spending on those basic things I mentioned is just 6% of GDP, I'm saying our gov't (both where I live and in the US) should limit itself to those things.

[TCoop6231]

@DystopianUtopia Although it looks like Cameron might be at least trying to reduce the reach of the state. The UK is moving in the right direction while Obama and the Congress are still talking about MORE stimulus spending and MORE nationalizations of industries. Granted, Bush43 was no Thomas Jefferson, but the pace of government expansion has exploded over the past couple years. And what they haven't collected in taxes today, they'll collect even more tomorrow. Sweden here we come!

[DystopianUtopia]

@TCoop6231

Cameron is nothing to be admired. He's raised VAT to 20% and capital gains tax to 28%, also his cuts aren't nearly enough and he doesn't share the philosophy that the state should not play such an extensive role in society, merely we should "cut waste".

[IRONMANAustralia]

That's a coincidence. I've got a theory I call the "Mitchell Curve":

The amount of oxygen a person can waste telling bureaucrats how they're screwing up the economy vs The IQ of those bureaucrats.

[h0tie]

@IRONMANAustralia the lower the IQ the more oxygen ure gonna waste :D i think theres gonna be an asymtope

[asdfgasdfasdful]

The growth-maximizing level of government spending is zero government spending.

[ACPUSA]

@asdfgasdfasdful Somalia says otherwise.

[asdfgasdfasdful]

@ACPUSA

No, it doesn't. Google "Better Off Stateless: Somalia Before and After Government Collapse" by P. Leeson in Journal of Comparative Economics, "Somalia After State Collapse" by B. Powell et al. in the Journal of Economic Behavior and Organization, 'The Law of the Somalis: A Stable Foundation for Economic Development in the Horn of Africa' by M.V. Notten, etc.

Somalia became very poor under a gov., and rapidly improved without one, and now suffers from foreign nation-building attempts.

[dnarby]

@asdfgasdfasdful

Wow.

Funny that most of us assume that bad government is better than no government!

[dannidandannikins]

@asdfgasdfasdful yeah, that's right... that's what the graph shows. Oh wait, no it doesn't, it shows the opposite.

Also, quite simply: no government = no objective definition of property rights and no objective means of dispute arbitration. Therefore, no stability of contract, no human rights, no means of dealing with others except by force. Anarchism is for anti-life fucktards such as, apparently, yourself.

[freesk8]

@dannidandannikins There are a lot of sincere, smart and well-meaning people who argue that stability of contract can be achieved without govt.

I'm not one of them, but look up the economist Murray Rothbard and the philosopher Stefbot here on YouTube for some intellectual challenge.

[dannidandannikins]

@freesk8 I know of and despise both of them. I appreciate your polite comment but I do have to draw issue with your analysis that those people are sincere, smart or well-meaning.

[freesk8]

@dannidandannikins You can take issue with the facts of what works best to order human society, but I find it hard to question the intelligence, sincerity and benevolence of stefbot and Rothbard. To demonstrate they were insincere or malevolent, you would have to provide some example from their writing.

To me, it is obvious that they want a better world.

But you and I agree that minimal govt is better than none, given human nature, right?

[dannidandannikins]

@freesk8 "you and I agree that minimal govt is better than none, given human nature, right?" absoolutely.

[asdfgasdfasdful]

@dannidandannikins

Being an economist, I was about to tell you about the field of institutional economics and how it rebuts your unsupported assertion, the evidential history of property rights, Nobel laureate Vernon Smith's famous Nobel speech where he points out that property predates states, the work of Avner Greif at Stanford, David Friedman, Demsetz, my articles on non-state property... but then I looked and saw you were an Objectivist and figured it wouldn't be worth the effort.

[TheAgorist]

@dannidandannikins As a subscriber to your videos and a supporter of your work, I am surprised and put off by what you have said here. The ad hominem you used is not only inappropriate, but a logical fallacy. Given that you didn't like when inmendham attacked you with frivolous insults, I find it inconsistent for you to attack people by calling them "anti-life fucktards." You have concerns over how society can operate without a central coercive authority, and having those concerns is fine. Cont.

[TheAgorist]

@dannidandannikins However, you assert the concerns about anarchism as an absolute that society will in fact fall without government without providing any proof to back up your claim. I would have found it much more honest and civil of you if you had simply asked how these services would be effectively provided in the absence of government. If you were given well reasoned answers or directed towards sources that discuss anarchistic theory in detail, then you have something to use your cont.

[TheAgorist]

@dannidandannikins these consequences are self evident and thus anarchists either want them to occur, or are dolts for not understanding it. However, this subtext is not a substitute for a well reasoned argument, and I am disappointed that tried to pull such a substitution.

[dannidandannikins]

@TheAgorist I'll do a video next week or some time soon to give you a proper response to this comment. In very short terms: while generally I often try to be at least polite (most of the time and until provoked) when discussing things with communists or theists, I regard anarchists and nihilists as absolute intolerable scum who deserve nothing but the most open hostility.

[TheAgorist]

@dannidandannikins I appreciate you taking the time to make a video response to my comments. I look forward to viewing it. As a philosopher, I agree with you your opposition to theism, communism, and nihilism. However, as an anarchist, a position which I base on rational empiricism, I hope that I can shown where my error has been, and why I deserve open hostility. If I am making such a large error in reason, I'd really like to know so I can correct my views :) Thanks so much.

[ajpmathwiz]

@asdfgasdfasdful What an ignorant thing to say. In an environment in anarchy, why would anyone enter into a contract? Who could enforce it?

[hahahaspam]

@asdfgasdfasdful

This is not necessarily the case. An individual in an anarchist environment would have to defend his own property rights. This is expensive and the reason we don't have individual cell phone towers is the same.

When a community pools together its fixed costs on that sort of infrastructure, it reduces the cost per person so much that there is a net economic benefit.