Thread by @Noahpinion

I wrote a @bopinion post about the Council of Economic Advisers' new report on "The Opportunity Costs of Socialism":

bloomberg.com/opinion/articl…

The report comes as confirmation that socialism is back, in a big way.

This report is good, because it will help get economists talking about the Big Ideas of political-economic organization again, instead of only focusing on small-bore topics (though small-bore topics are also good).

But the report actually doesn't do a good job of debunking modern-day socialism.

It spends a lot of time talking about communism, and about collectivization of agriculture, but these are not similar to modern-day socialism.

Modern-day socialists' top priority is to nationalize health insurance.

Unlike agriculture, health insurance seems to do well when nationalized.

The CEA report claims that national health insurance will shrink the economy a lot, because taxes will discourage people from working.

But the kind of model it uses to support this argument is not good for this purpose.

There's (at least) one more big thing the CEA report leaves out: People around the world seem to want big government.

Over time, rich countries have chosen to spend more and more of their money on government programs.

There's also a strong correlation between a country's per capita GDP and the percent of that GDP that it spends on government programs.

This suggests that big government is a luxury good. As people get richer, they want more of what big government has to offer.

So while the CEA report is good in that it gets people talking about the big ideas again, it seems unlikely to discourage people from wanting national health insurance or more government programs in general.

If that's "socialism", then socialism is winning.

(end)