July 26, 2005
That's just weird
Was reading a random post over at Andrew Sullivan (someone else is filling in for him at the moment) talking about how the Chinese government and the Chinese army may be having a difference of opinion over Taiwan. The government may be willing to take a less absolutist position on Taiwanese independence - or at least they seem to have stepped back a bit from one of their general's recent war-mongering statements. The army, on the other hand, would go absolutely nuts if Taiwan achieved independence, because that would completely encircle China with semi-belligerent states and leave it only limited access to the Pacific.
But that's not what's so weird. I surfed on over to the CIA World Factbook - an absolutely essential reference for those of you unaware of it - and checked out its page on China. There's some pretty interesting economic data there. For starters, it's now the second largest economy in the world, with an estimated $7 trillion GDP. The US did $11.75 trillion, so we're still ahead, but not growing as fast. China's population gives them a $5500 GDP per capita, compared to the US's $40,100, so we're still richer than they are.
But what really jumped out at me was the government budget. China runs a highly centralized, Soviet-style government, and has only in the past two decades really started moving towards a market style economy. You'd think their taxation would be obscene and their government budget bloated beyond belief. Hardly. Their budget was $318 billion. Ours was $1.862 trillion. Now, granted, our standard of living is way higher, and say what you want about our healthcare system, it beats China's hands down. But still... we're spending almost 16% of our GDP on government expenditures, while they're spending less than 5%. And our public debt as a percentage of GDP is more than twice theirs: 65% vs. 31.4%.
Not sure what all this means, but it surely seems counter-intuitive, to me anyways. Then again, China is still a Third World country, massive industrial growth notwithstanding.
Roughly 2/3 of our federal taxes go straight into the pockets of other Americans. If the federal government only taxed U.S. citizens for constitutionally mandated public services and goods, then our budget would probably be a heck of a lot smaller.
Posted by: Ben at July 27, 2005 9:51 AMThat's not entirely accurate, I'm afraid, or at least it's not the whole picture. It's true that about 1/3 of the budget is entitlements - wealth redistribution if you will - but another third is interest on loans. You can't run a public debt in excess of 60% of GDP without racking up some outrageous interest, but there isn't a thing unconstitutional about the government selling T-bills.
Posted by: ryan at July 27, 2005 1:07 PMRyan, what do you think about reducing the deficit? Mandatory, optional, or actually harmful (as Keynes would say, I think)?
Posted by: Evan Donovan at July 30, 2005 12:23 AMWhich deficit? Budget or outstanding debt? Reducing the latter can only be a good thing: interest obligations are eating away a third of the money the government collects each year. Reducing the former would probably be good. In the current situation it'd be great, as we're spending far more than we can ever hope to retain. But I think the current situation justifies some deficit spending.
Keynes supported deficit spending in certain, limited situations. The past few years would have met his criteria, but he didn't necessarily support constant, irresponsible borrowing like we're doing at the moment.
Posted by: ryan at July 30, 2005 6:56 AM