Social Scaling

George Rebane

Another one of those delightful, disorganized, and sometimes disjointed discussions has erupted in the comments following ‘The Reverends Beck and Sharpton Hold Meetings’.  The topic area has migrated from that of the original post on the Beck/Sharpton rallies in Washington, to the related area of types of governance that were actually the underlying thrusts of both rallies.  In this piece I will attempt to address a couple of themes that have emerged from those comments.

One theme is that totalitarian governments can result from overzealous implementation of both collectivist and conservative approaches to governance.  I have energetically, if not always elegantly, argued that, yes, such may indeed be the endpoint from both starting points.  But by their very nature collectivist intentions (e.g. as represented by, say, progressive socialism) are far more prone to lead to the public’s demand for an authoritarian ‘man on a white horse’.  The prime cause for this is that collectivist economies have always depended on setting up altruistic commonses (a la Hardin) that eventually collapse and cause wholesale limiting of liberty and widespread misery.  It was ever thus.

While collectivist literature – from Marx to B.F Skinner (Walden Two) – has always extolled a social utopia at the end of the road, conservative/libertarians have never promised anything of the sort.  The most these so-called ‘right wingers’ promise the people is a fair run for the money and place in the sun, with no guarantees that any given person will find either.  But regardless, the argument continues that a strongly collective society will be the best that imperfect Man can deliver.  The Left promises ‘equal achievement’, and the Right strives for equal opportunity.  One side understands that freedom and equality are two sides of a see-saw, the other side promises to raise both ends without breaking the damn thing.

But none of this says that in the right-left competition we cannot produce an authoritarian government from an ostensibly conservative, free-market society.  History has examples of the failure of the conservatives to ‘properly’ defend their ideals when under collectivist assault.  Chile’s Pinochet was the response to communist Allende, and Spain’s Franco was the response to the Moscow sponsored Popular Front.  (We will excuse calls to include socialists Hitler and Mussolini in this assemblage by victims of our failed public educational system.)  Both revolts resulted in dictatorships and state control, loss of liberties, etc.  However, both governments eventually yielded wealth producing economies that allowed the dictators to retire without bloodshed.  For Spain it was the first time since it stopped importing gold from the new world, and for Chile it was the first time ever, making it one of the most vibrant of Latin American economies.

The second theme is also a familiar one, and perhaps the more important of the two.  It goes something like ‘Look at country X, see how happy they are, everyone has health care, and no one goes hungry, they don’t use much energy, and the people dance and sing themselves to sleep every night.  Why can’t America be like X?’  In the referenced comment thread, Denmark has emerged as the placeholder for X.

At 5.5 million people, Denmark is less than 1.7% the size of the US, and has less than 0.5% of our land area.  Economically it is in the medium range with $36,336 GDP per capita versus $46,381 for the US.  Culturally, it is very homogeneous with over 90% being ethnic Danes, and most of the remainder comprised of people from similar European cultures.  Its government is a parliamentary democracy with a constitutional monarch as its titular head of state.  Thanks to America, Denmark, like so many other EU countries, spends relatively little on defense.

The overarching question in each of these debates suggesting we’d be better off if only we were like Denmark, or pick another one of your favorites, is ‘can the adopted social policies of such a country yield similar results in America?’  In a more technical sense (say, from the systems sciences), the question becomes one of scaling – do the social policies of country X beneficially scale when applied to country Y?  We will call this notion ‘social scaling’.

Social scaling may be viewed from many perspectives, or along the several dimensions of a society.  We can examine whether the policies of X will socially scale to Y in the areas of security, economy, welfare, education, healthcare, individual liberties, property ownership, and so on.  I maintain that the larger and more complex two systems (aka countries) become, the more difficult (impossible?) it is to take one aspect of the first system/country and appropriately scale its direct application up/down to the other system/country.

The truth of this proposition rests on the further notion of the difference in the transfer functions of the corresponding subsystems making up X and Y.  Think of a transfer function as the collection of applicable input-output relationships – e.g. ‘raise income tax by 1% yields an increase of 0.7% of government revenues’.  And, of course, we can also see that the collateral effects in X vs Y would differ when the same prescriptions are applied to both countries.

All this says is that social scaling is not as readily achieved as currently argued by voices from the left.  We can’t simply adopt Denmark’s healthcare system (or some other policy) and apply it to a much larger and culturally polyglot America, and expect the same results.  Such policies do not scale, no matter the wisdom suggesting their in vacuo application.  In short, social scaling should be approached with great care and deliberation.  Its blind application could very easily ‘crash the system’.

Before concluding this small dissertation, I want to point out some little known realities not reported in the lamestream media.  None of the socialist nostrums practiced by EU countries, or anyplace else for that matter, are sustainable.  How do we know this?  Because the costs of such programs are taking an ever greater fraction of their governments' budgets – since that can’t go on indefinitely, that is the definition of unsustainable.  Be it healthcare, welfare, public employee pensions, or energy subsidies, the costs are outpacing the budgets.

The bag of solutions still contains only two – raise taxes and take the hit to the economy, and/or lower costs through rationing or privatizing.  That may just explain why countries so encumbered are doing all they can to cut back or get out of such programs, all the while we are making headway in going where they no longer want to be.

Comments

[Paul Emery]

George

Thanks for the thoughtful response. I picked Denmark as a country to look at because it is one that I have personal experiences with( Iplayed music in Denmark off and on for years ) and I have friends there. By the definition that you subscribe to Denmark is a Socialist country. It has high taxation, re-distributes wealth through social services and programs. has national health care etc. It is one of many Western European and Scandinavian countries that we could use as an example. According to you're definitions these are Socialist countries that according to you subscribe to "a misguided form of governance destructive to human aspirations and the human spirit"
Also
"Socialists are anti-liberty. Socialism or to promote the enslavement of the individual to the collective is immoral and anti-American ("life, liberty and the pursuit of happiness"). Socialists believe that the correct equation designed and implemented via 'planners', 'bureaucrats', 'czars', 'regulations', 'entitlements', 'debt' provide the elixir of equality or social justice."

In reality Denmark is pretty nice places to live as I've noted before.

Whether we should adopt some of their policies is another question. I'm pointing out that the Socialist to totalitarian journey doesn't seem to be happening in these countries .

You're theory of the economic future is a theory that needs to be looked along with other ideas at but it is just a theory.

[George Rebane]

I'm sorry Paul, but none of what Denmark is doing is sustainable. We will all see that when we pull the plug on our Navy's eleven (one's already gone) carrier task groups. That socialism is not sustainable is not a theory, it is a bald-faced fact of history.

Germany, that rejected Keynesian stimulation early in this recession, has restored its unemployement rate to pre-recession levels by following Mises' 'Do nothing, sooner!' And that country is also working hard to pull out of its socialist programs as fast as it can. Whether they can do it in time is another question, but at least they are paddling in the right direction.

Free enterprise, capitalism, and individual liberties created the greatest economic boom to improve the lives and lift aspirations of all the world's peoples. Nothing else has even come close to matching it. Why are India and China today shedding their collectivist ways as fast as they can?

[Paul Emery]

So George, your opinion of the evils of socialism, when confronted with contrary information is supported only by a theory of how things will be in the future. That's not a very convincing argument. I'm looking at things as they are today. Denmark has a 4.3% unemployment rate as we speak http://www.indexmundi.com/denmark/unemployment_rate.html and things look pretty good in the near future. It's not possible to have a level discussion when theories are presented as facts. I do know that as we speak Denmark is not headed towards totalitarianism but is doing rather well considering the economic situation/ This is from the Heritage Foundation, a conservative think tank . They sure don't seem worried about a totalitarian takeover . I believe that capitalism and socialism can work rather well together and I'm using Denmark as an example. Not to say things are perfect there but when you eliminate corruption and special interest control of the political process things seem to work.

From the Heritage Foundation this year

"Denmark’s modern and competitive economy performs well on many of the 10 economic freedoms, enhancing entrepreneurship and macroeconomic stability. The country has a strong tradition of openness to global trade and investment, and transparent and efficient regulations are applied evenly in most cases. Denmark also boasts an efficient, independent judiciary that protects property rights, and the level of corruption is extraordinarily low. The financial sector is competitive, and its efficiency is supported by prudent lending practices and sound oversight. The impact of the global financial crisis on the banking sector has been relatively small."

Here is the whole report
http://www.heritage.org/index/country/Denmark

[George Rebane]

Paul, your expanded trifecta – 1) today’s salutary condition of Denmark, 2) sustainability of Denmark’s current path, 3) advisability of socially scaling Denmark to US – are each worth an essay of their own and do skirt the point of my post, but I’ll try to respond.

Today’s Denmark – The prime industry and major source of revenues for the country is technically known as mining - extracting depleting natural resources, e.g. North Sea oil and gas. The government employs over 40% (not a typo) of its workforce. Marginal tax rate is 69% with a total marginal tax rate going up to 75% when the country’s 25% VAT (on EVERYTHING!) is figured in. Risky ventures (establishing growth companies) are both unadvised and unknown. The productive labor force is primarily in service industries. Welfare is rampant. The Danish population is in decline due to its 1.74 replacement rate (2.1 yields a stable population). The government is in a quandary figuring out how to lower taxes, get the birthrate up, and find a sustainable economy as the revenues from oil and gas decline.

Tomorrow’s Denmark – Denmark is a typical EU country, that if it maintains its current public policies, is rushing headlong into a brick wall. It has an unsustainable economy, an unsustainable tax structure, and unsustainable demographics. Looking at the country’s current docility in the face of this is akin to the experience of someone falling off a very tall building – the view is great, weightlessness is comfortable, and the breeze is enjoyable. Denmark is quietly rushing into a brick wall, and they know it.

Social Scalability to US – Given its current condition and portents, there is literally no part of the ‘Danish way’ that is socially scalable to our benefit in America. The country serves us primarily as good tourist destination, compliant partner in trade and overseas adventures, and a beguiling ‘Hans Christian Anderson’ happy land for those not willing to take a closer look under the hood.

[Paul Emery]

You sure paint a different picture of Denmark than the conservative Heritage Foundation.
"Denmark and New Zealand are found to be the two most free economies"
http://quantoid.net/blog/?p=7

It seems that your economic theories come from a school that is not necessarily shared by other Conservative observers.

The Danes are a well educated and the average turnout for parliamentary elections has been approximately 85 percent and has not varied more than 3-4 percent to date , according to http://archive.idea.int/press/pr20011120.htm

They are also the happiest nation in the world according to a recent Gallup poll

"The United States, which had the highest gross domestic product per capita, came in at No. 16 for overall well-being and No. 26 for enjoyment, referred to as positive feelings. The No. 1 spot for overall well-being went to Denmark, and New Zealand landed the No. 1 slot for positive feelings."

However according to you they are heading for totalitarian hell. Scaleability is not the topic I'm commenting about. I am simply observing that your view of socialism is not one that seems to hold up and is not even supported by established Conservative institutions.

[Mikey McD]

75% marginal tax, sounds like hell to me.

[Mikey McD]

The subjects (citizens) of Denmark have traded unknown (never experienced?) personal liberty for protection/service from a nanny government. The taxation rates in Denmark alone tell a rational man that personal liberty is not a coveted virtue in Denmark. Try selling Denmark's 75% marginal tax rate in America where less than half the population pays any federal income taxes...

"Socialists are anti-liberty. Socialism or to promote the enslavement of the individual to the collective is immoral and anti-American ("life, liberty and the pursuit of happiness"). Socialists believe that the correct equation designed and implemented via 'planners', 'bureaucrats', 'czars', 'regulations', 'entitlements', 'debt' provide the elixir of equality or social justice."

[George Rebane]

Paul, perhaps you have done us all another service in exposing the fracture of logic between the left and the right. Not saying that Heritage and I always fly in tight formation, but there is nothing in either my report of the facts or my assessments that go contrary to what the Heritage Foundation describes as Denmark's current state. Your last sentence is possibly the most egregious in how you interpret differences where there are none. Please take another look at what I wrote.

[Paul Emery]

I guess you've got to feel sorry for the Danes. Even though they vote in overwhelming numbers to continue supporting their "socialist" government they are really hopelessly ignorant that they are not really free and are instead the serfs of a Socialist state. They are not free to beg for health care at an emergency room or free to not educate their children to the full extent of their ability because they cannot afford tuition. They are not free to fear walking the streets in safety (Denmark is number 2 in the world for least homicides). They don't have the freedom to experience 32,000 gun deaths per year because of gun control (Denmark less than 10) They don't have the freedom to have 12% unemployment (CAlifornia) they have 4.5. They don't have the freedom to go to jail for growing an illegal plant in their back yard.

Pretty sad situation despite a high school graduation rate of 93%. That shows that education is not the key to enlightenment.

I need to contact my friends over there to try to inform them as best I can that they are not free and that their happiness is because they are in a socialist stupor.

[Mikey McD]

America would still be leading ANY Freedom index if it were not for the socialist actions of Woodrow Wilson (16th Amendment, 1913 Federal Reserve Act), FDR (New Deal, gold confiscation and the re-defining of the word 'rights') and subsequent entitlement mentality which cripples our country today.

One must contend that the trend in the USA is away from a personal liberty based free market capitalism to a socialized government controlled economy. This movement/trend is in the direction of totalitarianism (opposite of personal liberty).

Freedom..................................slavery
capitalism.....>>>.socialism..>>>.....totalitarian

We are not far removed from totalitarianism today (is there a facet of life that the government does not have some control? property, food, shelter, transportation, education, airwaves, etc).

[George Rebane]

"... serfs of the Socialist state."?? Why do you think they are serfs? They most certainly are not. They happily vote to transfer wealth from their wealth producing sector into their own pockets. You have to recall that adding the cohorts of state workers and welfare recipients, they form not only a plurality but a majority in any election. Denmark is a country where the Peter/Paul Principle is firmly entrenched. Until they hit the wall - i.e. run out of other people's money - they are happy as clams. Serfs indeed! They are the rulers.

[Mikey McD]

By definition a man must value his liberty to ever be enslaved.

To a producer (Peter) Denmark sounds like hell, to one looking for security (Paul) it could appear as a utopia.

We have already reached a tipping point with only 45% of Americans (Peter's) paying any federal income tax to support the 'rights' of the Paul's.

In all sincerity, how do progressives obtain peace of mind regarding a discriminatory (immoral) progressive tax system which they promote? Rightfully, our country no longer allows for discrimination based on religion, race, sex, sexual orientation, disability, etc. However, our society openly discriminates against our entrepreneurs...How hypocritical. How do progressives obtain a clear conscience regarding a discriminatory (immoral) progressive tax system which they promote?

[George Rebane]

Mikey, I think you’re taking this examination into regions that are either untraveled or not recognized by progressives who are overwhelmingly secular humanists according to polls and their own literature. In these regions something called ‘moral objectivism’ rules. By most secular humanist philosophers this boils down into a seemingly simple algorithm for determining moral behavior, namely ‘if it’s right for me, it’s right for you, and if it’s wrong for you then it’s wrong for me.’ The problem that is not addressed is what agency ascribes the ‘right’ and the ‘wrong’. So secular humanists wind up just kicking the can down the street.

Some secular humanists believe that the collective determines right and wrong, and therefore the social contract. However, no one has nailed down the structure of the collective that can ethically issue such determinations. Well, almost no one – historically if you have enough guns, you can set up your own collective structure, come up with any rules of morality you like, and then enforce them with the guns.

We also know that followers of religions have done similar things by interpreting their scriptures (where presumably the dictums of morality are documented) through the means of fiat. In a the more recent benign societies, religions have not had that power, and therefore have had to do a lot of serious noodling about their scriptures before coming out with a preferred and/or recommended set of moral tenets. But in any event, religious folk almost always ascribe the source of their morals to a sacred origin.

[Paul Emery]

George,

We can argue theories forever and they are just that, theories. What I have been doing is documenting through legitimate sources the acknowledgment that life is pretty good right now in Denmark and has been for the past 50 years. Other countries that you would consider Socialist even do better such as Norway and Sweden but I focused on Denmark because I have some experience there. It is not acceptable that we have over 30,000 deaths per year due to firearms. It is not acceptable that people don't get essential health care because they can't afford it and go bankrupt to pay for overpriced medical services. It is not acceptable that California has 12% unemployment. It is not acceptable that we have a 28% dropout rate in high school. I can go on and on. My example, Denmark, scores higher grades in all these areas, To dismiss the success of other systems and not give the reasons for success a close look because you have a "theory" about the future is far off track when it comes to looking for solutions to unacceptable problems.

I have a tremendous respect for you're scholarship but it is very disappointing that you allow you're dogma to get in the way of looking at possible solutions to persistent problems. I also sometimes do the same thing. That's why I enjoy our dialogue because I'm being exposed to new ideas.

I seldom propose my own solutions on you're pages. Instead I chose to critically examine yours and counter with my critique.

Mickey, if you examine the Heritage Foundation analysis of the economics in Denmark you should appreciate that it's a pretty good climate for entrepreneurs despite the very high taxes, My impression is that almost everybody pays some taxes, different from here. Also, I don't appreciate being categorized as a "Paul". . It's convenient to dismiss honest dialogue when faced with challenging arguments. Please correct me if I ever do that to you.

[George Rebane]

Paul, who categorized you as a ‘Paul’? The Peter/Paul Principle stands on its own as a social paradigm and has nothing to do per se with a Paul Emery or a George Rebane. I feel that we’re losing it in this discussion. For the record, I believe that we were trying find a way forward for both the US and, incidentally, Denmark. Repeating arguments that Denmark hasn’t hit the wall yet will not get us very far. Instead, a compelling repartee would be to present convincing evidence that continuing on their current path would make their future sustainable. That you haven’t done.

You dismiss my citing the histories of socialism and capitalism as “theories”, and that doesn’t get us very far. You return again and again to a selective recent history of Denmark along with selective parameters of its current state, ignoring my treatment and data of the same that supports the conclusion that it is it as an unsustainable social order. That doesn’t get us very far. I have addressed your arguments in detail – if not, point out the omissions.

Today the Danish government recognizes by its very efforts that its economy, tax structure, and demographics are unsustainable. You talk past this and again cite what a comfortable fall the country is having. I’m afraid it is you who is talking about the theory of a sustainable socialistic order that has never had a successful example (50 year histories of small internationally supported countries don’t count, the Soviet Union fell after 75 years of full employment, China changed course before 50 years were up, and Vietnam is doing it even faster). No, I’m afraid you are pushing a theory of sustainable socialism that has yet to be demonstrated. And rejoice, you are not alone in this effort, the entire Obama administration and Democratic Congress are in full agreement with you. This is not a personal attack, but simply an assessment of similarity of positions.

I will admit that free market capitalism has survived only about 250 years (longer, if you take the history of the Low Countries since the Renaissance into account), and much of the last century it has had to bear the burden of encroaching socialism. And it’s not clear whether free market capitalism can continue to do so in a large, complex society with a polyglot culture and rapidly marginalizing workforce within a vast landmass that has appended historical baggage (e.g. Reconquista). But to date, free market capitalism is absolutely the most proven form of governance to provide the most to the most. That is not a theory but an historical fact.

Your continued rejection of this will signal recognition of the gulf between our belief systems, and a respectful parting of the ways on this discussion thread. I will look forward to the next one on which we can, perhaps, make more progress toward common ground.