Friday, March 1, 2024

“Social Expenditures Are Killing The OECD Economies”

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Once people discover that they can vote themselves other people’s money, they start voting in power politicians who promise ever more transfers of money. Because elections happen every few years, and politicians think of only the next election, soon the Welfare Expenditure spirals out of control, bankrupting the country. This is what has happened in the OECD countries, the block of the richest countries, and also that has most educated people. So education is no insurance against people bankrupting their own country to give themselves the luxury they otherwise can’t afford.

“Back in 1980, the OECD members spent 15.4 percent of GDP on public social programs.  In 2014, this reached 21.6 percent….

…….No OECD member has seen a decline in social expenditures.  Some have seen massive increases.  In 1980, Portugal spent 9.6 percent of its GDP on public social programs.  Now that number is 25.2 percent.  Greece was at 10.3 percent in 1980. It currently sits at 24 percent.”

Both, Portugal and Greece are now bankrupt. And most of the other OECD countries are in queue to file for bankruptcy.

Over at, Sierra Rayne has details:

“The story for the U.S. is also frightening, with the increase occurring almost entirely under the Obama administration.  In 1980, American social expenditures were at 12.8 percent of GDP.  By 1990, they hadn’t budged and were still at just 13.1 percent.  In 2008, they reached 15.5 percent, effectively unchanged from the 1995 value.  But as of 2014, spending topped 19.2 percent of GDP.

Canada, the socialist neighbor to the north, used to spend far more on social programs than the U.S.  Not anymore.  The U.S. passed Canada in 2010, and the gap continues to widen, with Canada at 17.0 percent in 2014 – 2.2 percent of GDP lower than the U.S.  Compare that to 1990, when Canada spent 4.5 percent of GDP more than the United States on social expenditures.

So, nearly all OECD members have experienced substantial increases in social spending over the last three and a half decades, and nearly all of their economies are seeing progressively lower economic growth during this period.  Is there a relationship?

Among the European members, the data is clear.

Once social spending reaches 20 percent of GDP, there is a significant negative relationship with economic growth.  Canada, the U.S., and Australia are also shown for comparison. While they are below the threshold, the latter two members of this trio are still increasing social spending over the past few years.  Canada’s social expenditures relative to the size of the economy have declined dramatically since 2009 but are still almost one percent of GDP larger than before current Conservative Party prime minister Stephen Harper took office in 2006.

This overall negative relationship between European social spending and economic growth is present – albeit weaker – in previous years dating back at least two decades, and it appears to have gotten stronger and more clear as more of the European members have crossed the “red line” to ever-increasing degrees.

High social expenditures are seriously damaging many of the OECD economies.  As Europe looks at the myriad causes of its persistent economic woes, the first remedy would involve drastic cuts to social spending programs to bring them back down at least to the levels of the 1980s.  There is also a cautionary tale for the U.S. in this story: it is very close to the socialist tipping point the EU has fallen over.”(from the article)

Read the whole article here.

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