Suicidal Despair and the “War on Whites”

THREE GRAPHS AND ONE LINK UPDATED ON 06/08/18. SUBSTANCE OF TEXT UNCHANGED.

This entry is prompted by a recent spate of posts and articles about the rising mortality rate among non-Hispanic whites without a college degree (hereinafter working-class whites, for convenience). Thomas Lifson characterizes the trend as “a spiritual crisis”, after saying this:

White males, in large numbers, are simply losing their will to live, and as a result, they are dying so prematurely and in such large numbers that a startling demographic gap has emerged. [“Stunning Evidence that the Left Has Won its War on White Males“, American Thinker, March 26, 2017]

Later in the piece, Lifson gets to the “war” on white males:

For at least four decades, white males have been under continuous assault as bearers of “white privilege” and beneficiaries of sexism. Special preferences and privileges have been granted to other groups, but that is the least of it.  More importantly, the very basis of the psychological self-worth of white males have been under attack.  White males are frequently instructed by authority figures in education and the media that they are responsible for most of the evils of the modern world, that the achievements of Euro-American civilization are a net loss for humanity, stained by exploitation, racism, unfairness, and every other collective evil the progressive mind can manufacture.

Some white males are relatively unscathed by the psychological warfare, but others are more vulnerable. Those who have educational, financial, or employment achievements that have rewarded their efforts may be able to keep going as productive members of society, their self-esteem resting on tangible fruits of their work and social position. But other white males, especially those who work with their hands and have been seeing job opportunities contract or disappear, have been losing the basis for a robust sense of self-worth as their job opportunities disappear.

We now have statistical evidence that political correctness kills.

We have no such thing. The recent trend isn’t yet significant. But it is real, and government is the underlying cause.

To begin at the beginning, the source of the spate of articles about the rising mortality rate of working-class whites is Anne Case and Angus Deaton’s “Mortality and Morbidity in the 21st Century” (Brookings Institution, Brookings Papers on Economic Activity (conference edition), March 17, 2017). Three of the paper’s graphs set the scene. This one shows mortality trends in the United States:

The next figure indicates that the phenomenon isn’t unique to non-Hispanic whites in the age 50-54 bracket:

But the trend among American whites defies the trends in several other Western nations:

Whence the perverse trend? It seems due mainly to suicidal despair:

How do these recent trends stack up against the long view? I couldn’t find a long time series for drug, alcohol, and suicide mortality. But I did find a study by Feijin Luo et al. that traces suicide rates from just before the onset of the Great Depression to just before the onset of the Great Recession — “Impact of Business Cycles on US Suicide Rates, 1928–2007” (American Journal of Public Health, June 2011). Here are two key graphs from the report:

The graphs don’t reproduce well, so the following quotations will be of help:

The overall suicide rate fluctuated from 10.4 to 22.1 over the 1928–2007 period. It peaked in 1932, the last full year of the Great Depression, and bottomed in 2000. The overall suicide rate decreased from 18.0 in 1928 to 11.2 in 2007. However, most of the decline occurred before 1945; after that it fluctuated until the mid-1950s, and then it gradually moved up until the late 1970s. The overall suicide rate resumed its downward trend from the mid-1980s to 2000, followed by a trend reversal in the new millennium.

Figure 1a [top] shows that the overall suicide rate generally increased in recessions, especially in severe recessions that lasted longer than 1 year. The largest increase in the overall suicide rate occurred during the Great Depression (1929–1933), when it surged from 18.0 in 1928 to 22.1 (the all-time high) in 1932, the last full year of the Great Depression. [The Great Depression actually lasted until 1940: TEA.] This increase of 22.8% was the highest recorded for any 4-year interval during the study period. The overall suicide rate also rose during 3 other severe recessions: [the recession inside the Great Depression] (1937–1938), the oil crisis (1973–1975), and the double-dip recession (1980–1982). Not only did the overall suicide rate generally rise during recessions; it also mostly fell during expansions…. However, the overall suicide rate did not fall during the 1960s (i.e., 1961–1969), a notable phenomenon that will be explained by the different trends of age-specific suicide rates.

The age-specific suicide rates displayed more variations than did the overall suicide rate, and the trends of those age-specific suicide rates were largely different. As shown in Figure 1b [bottom], from 1928–2007, the suicide rates of the 2 elderly groups (65–74 years and 75 years and older) and the oldest middle-age group (55–64 years) experienced the most remarkable decline. The suicide rates of those groups declined in both pre- and postwar periods. The suicide rates of the other 2 middle-aged groups (45–54 years and 35–44 years) also declined from 1928–2007, which we attributed to the decrease during the war period more than offsetting the increase in the postwar period. In contrast with the declining suicide rates of the 2 elderly and 3 middle-age groups, the suicide rates of the 2 young groups (15–24 years and 25–34 years) increased or just marginally decreased from 1928–2007. The 2 young groups experienced a marked increase in suicide rates in the postwar period. The suicide rate of the youngest group (5–14 years) also increased from 1928–2007. However, because of its small magnitude, we do not include this increase in the subsequent discussion.

We noted that the suicide rate of the group aged 65–74 years, the highest of all age groups until 1936, declined the most from 1928 to 2007. That rate started at 41.2 in 1928 and dropped to 12.6 in 2007, peaking at 52.3 in 1932 and bottoming at 12.3 in 2004. By contrast, the suicide rate of the group aged 15–24 years increased from 6.7 in 1928 to 9.7 in 2007. That rate peaked at 13.7 in 1994 and bottomed at 3.8 in 1944, and it generally trended upward from the late 1950s to the mid-1990s. The suicide rate differential between the group aged 65–74 years and the group aged 15–24 years generally decreased until 1994, from 34.5 in 1928 to 1.6 in 1994.

All age groups experienced a substantial increase in their suicide rates during the Great Depression, and most groups (35–44 years, 45–54 years, 55–64 years, 65–74 years, and 75 years and older) set record-high suicide rates in 1932; but they reacted differently to many other recessions, including severe recessions such as the [1937-1938 recession] and the oil crisis. Their reactions were different during expansions as well, most notably in the 1960s, when the suicide rates of the 3 oldest groups (75 years and older, 65–74 years, and 55–64 years) declined moderately, and those of the 3 youngest groups (15–24 years, 25–34 years, and 35–44 years) rose noticeably….

[T]he overall suicide rate and the suicide rate of the group aged 45–54 years were associated with business cycles at the significance level of 1%; the suicide rates of the groups aged 25–34 years, 35–44 years, and 55–64 years were associated with business cycles at the significance level of 5%; and the suicide rates of the groups aged 15–24 years, 65–74 years, and 75 years and older were associated with business cycles at nonsignificant levels. To sumarize, the overall suicide rate was significantly countercyclical; the suicide rates of the groups aged 25–34 years, 35–44 years, 45–54 years, and 55–64 years were significantly countercyclical; and the suicide rates of the groups aged 15–24 years, 65–74 years, and 75 years and older were not significantly countercyclical.

The following graph, obtained from the website of the American Foundation for Suicide Prevention, extends the age-related analysis to 2015:

And this graph, from the same source, shows that the rising suicide rate is concentrated among whites and American Indians:

Though this graph encompasses deaths from all causes, the opposing trends for blacks and whites suggest strongly that working-class whites in all age groups have become much more prone to suicidal despair in the past 20 years. Moreover, the despair has persisted through periods of economic decline and economic growth (slow as it has been).

Why? Case and Deaton opine:

[S]ome of the most convincing discussions of what has happened to working class whites emphasize a long-term process of decline, or of cumulative deprivation, rooted in the steady deterioration in job opportunities for people with low education…. This process … worsened over time, and caused, or at least was accompanied by, other changes in society that made life more difficult for less-educated people, not only in their employment opportunities, but in their marriages, and in the lives of and prospects for their children. Traditional structures of social and economic support slowly weakened; no longer was it possible for a man to follow his father and grandfather into a manufacturing job, or to join the union. Marriage was no longer the only way to form intimate partnerships, or to rear children. People moved away from the security of legacy religions or the churches of their parents and grandparents, towards churches that emphasized seeking an identity, or replaced membership with the search for connections…. These changes left people with less structure when they came to choose their careers, their religion, and the nature of their family lives. When such choices succeed, they are liberating; when they fail, the individual can only hold him or herself responsible….

As technical change and globalization reduced the quantity and quality of opportunity in the labor market for those with no more than a high school degree, a number of things happened that have been documented in an extensive literature. Real wages of those with only a high school degree declined, and the college premium increased….

Lower wages made men less marriageable, marriage rates declined, and there was a marked rise in cohabitation, then much less frowned upon than had been the case a generation before…. [B]eyond the cohort of 1940, men and women with less than a BA degree are less likely to have ever been married at any given age. Again, this is not occurring among those with a four-year degree. Unmarried cohabiting partnerships are less stable than marriages. Moreover, among those who do marry, those without a college degree are also much more likely to divorce than are those with a degree….

These accounts share much, though not all, with Murray’s … account [in Coming Apart] of decline among whites in his fictional “Fishtown.” Murray argues that traditional American virtues are being lost among working-class white Americans, especially the virtue of industriousness. The withdrawal of men from the labor force reflects this loss of industriousness; young men in particular prefer leisure—which is now more valuable because of video games … —though much of the withdrawal of young men is for education…. The loss of virtue is supported and financed by government payments, particularly disability payments….

In our account here, we emphasize the labor market, globalization and technical change as the fundamental forces, and put less focus on any loss of virtue, though we certainly accept that the latter could be a consequence of the former. Virtue is easier to maintain in a supportive environment. Yet there is surely general agreement on the roles played by changing beliefs and attitudes, particularly the acceptance of cohabitation, and of the rearing of children in unstable cohabiting unions.

These slow-acting and cumulative social forces seem to us to be plausible candidates to explain rising morbidity and mortality, particularly their role in suicide, and with the other deaths of despair, which share much with suicides. As we have emphasized elsewhere, … purely economic accounts of suicide have consistently failed to explain the phenomenon. If they work at all, they work through their effects on family, on spiritual fulfillment, and on how people perceive meaning and satisfaction in their lives in a way that goes beyond material success. At the same time, cumulative distress, and the failure of life to turn out as expected is consistent with people compensating through other risky behaviors such as abuse of alcohol, overeating, or drug use that predispose towards the outcomes we have been discussing….

What our data show is that the patterns of mortality and morbidity for white non-Hispanics without a college degree move together over lifetimes and birth cohorts, and that they move in tandem with other social dysfunctions, including the decline of marriage, social isolation, and detachment from the labor force…. Whether these factors (or factor) are “the cause” is more a matter of semantics than statistics. The factor could certainly represent some force that we have not identified, or we could try to make a case that declining real wages is more fundamental than other forces. Better, we can see globalization and automation as the underlying deep causes. Ultimately, we see our story as about the collapse of the white, high school educated, working class after its heyday in the early 1970s, and the pathologies that accompany that decline. [Op. cit., pp. 29-38]

The seemingly rigorous and well-reasoned analyses reported by Case-Deaton and Luo et al. are seriously flawed, for these reasons:

  • Case and Deaton’s focus on events since 1990 is analogous to a search for lost keys under a street lamp because that’s where the light is. As shown in the graphs taken from Luo et al., suicide rates have at various times risen (and dropped) as sharply as they have in recent years.
  • Luo et al. address a much longer time span but miss an important turning point, which came during World War II. Because of that, they resort to a strained, non-parametric analysis of the relationship between the suicide rate and business cycles.
  • It is misleading to focus on age groups, as opposed to birth-year cohorts. For example, persons in the 50-54 age group in 1990 were born between 1936 and 1940, but in 2010 persons in the 50-54 age group were born between 1956 and 1960. The groups, in other words, don’t represent the same cohort. The only meaningful suicide rate for a span of more than a few years is the rate for the entire population.

I took a fresh look at the overall suicide rate and its relationship to the state of the economy. First, I extended the overall, age-adjusted suicide rate for 1928-2007 provided by Luo et al. in Supplementary Table B (purchase required) by splicing it with a series for 1981-2016 from the Centers for Disease Control and Prevention. I then drew on the database at Measuring Worth to derive year-over-year changes in real GDP for 1928-2016. Here’s an overview of the two time series:

Suicide rate and change in real GDP by year

The suicide rate doesn’t drop below 15 until 1942. From 1943 through 2016 it vacillates in a narrow range between 10.4 (2000) and 13.7 (1977). Despite the rise since 2000, the overall rate still hasn’t returned to the 1977 peak. And only in recent years has the overall rate reached figures that were reached often between 1943 and 1994.

Moreover, the suicide rate from 1928 through 1942 is strongly correlated with changes in real GDP. But the rate from 1943 through 2016 (or any significant subset of those years) is not:

Suicide rate vs. change in real GDP

Something happened during the war years to loosen the connection between the state of the economy and the suicide rate. That something was the end of the pervasive despair that the Great Depression inflicted on huge numbers of Americans. It’s as if America had a mood transplant, one which has lasted for more than 70 years. The recent uptick in the rate of suicide (and the accompanying rise in slow-motion suicide) is sad because it represents wasted lives. But, as noted above, it hasn’t returned to its 1977 peak, and is just slightly more than one standard deviation above the 1943-2016 average of  12.3 suicides per 100,000 persons:

Age-adjusted suicide rate 1943-2016

(It seems to me that researchers ought to be asking why the rate was so low for about 20 years, beginning in the 1980s.)

Perhaps the recent uptick among working-class whites can be blamed, in part, on loss of “virtue”, technological change, and globalization — as Case and Deaton claim. But they fail to notice the bigger elephant in the room: the destructive role of government.

Technological change and globalization simply reinforce the disemployment effects of the long-term decline in the rate of economic growth. I’ve addressed the decline many times, most recently in “Presidents and Economic Growth“. The decline has three main causes, all attributable to government action, which I’ve assessed in “The Rahn Curve Revisited“: the rise in government spending as a fraction of GDP, the rise in the number of regulations on the books, and the (unsurprising) effect of those variables on private business investment. The only silver lining has been a decline in the rate of inflation, which is unsurprising in view of the general slow-down of economic growth. Many jobs may have disappeared because of technological change and many jobs may have been “shipped overseas”, but there would be a lot more jobs if government had kept its hands off the economy and out of Americans’ wallets.

Moreover, the willingness of Americans — especially low-skill Americans — to seek employment has been eroded by various government programs: aid to the families of dependent children (a boon to unwed mothers and a bane to family stability), food stamps, disability benefits, the expansion of Medicaid, subsidized health-care for “children” under the age of 26, and various programs that encourage women to work outside the home, thus fostering male unemployment.

Economist Edward Glaeser puts it this way:

The rise of joblessness—especially among men—is the great American domestic crisis of the twenty-first century. It is a crisis of spirit more than of resources. The jobless are far more prone to self-destructive behavior than are the working poor. Proposed solutions that focus solely on providing material benefits are a false path. Well-meaning social policies—from longer unemployment insurance to more generous disability diagnoses to higher minimum wages—have only worsened the problem; the futility of joblessness won’t be solved with a welfare check….

The New Deal saw the rise of public programs that worked against employment. Wage controls under the National Recovery Act made it difficult for wages to fall enough to equilibrate the labor market. The Wagner Act strengthened the hand of unions, which kept pay up and employment down. Relief efforts for the unemployed, including federal make-work jobs, eased the pressure on the jobless to find private-sector work….

… In 2011, more than one in five prime-age men were out of work, a figure comparable with the Great Depression. But while employment came back after the Depression, it hasn’t today. The unemployment rate may be low, but many people have quit the labor force entirely and don’t show up in that number. As of December 2016, 15.2 percent of prime-age men were jobless—a figure worse than at any point between World War II and the Great Recession, except during the depths of the early 1980s recession….

Joblessness is disproportionately a condition of the poorly educated. While 72 percent of college graduates over age 25 have jobs, only 41 percent of high school dropouts are working. The employment-rate gap between the most and least educated groups has widened from about 6 percent in 1977 to almost 15 percent today….

Both Franklin Roosevelt and Lyndon Johnson aggressively advanced a stronger safety net for American workers, and other administrations largely supported these efforts. The New Deal gave us Social Security and unemployment insurance, which were expanded in the 1950s. National disability insurance debuted in 1956 and was made far more accessible to people with hard-to-diagnose conditions, like back pain, in 1984. The War on Poverty delivered Medicaid and food stamps. Richard Nixon gave us housing vouchers. During the Great Recession, the federal government temporarily doubled the maximum eligibility time for receiving unemployment insurance.

These various programs make joblessness more bearable, at least materially; they also reduce the incentives to find work. Consider disability insurance. Industrial work is hard, and plenty of workers experience back pain. Before 1984, however, that pain didn’t mean a disability check for American workers. After 1984, though, millions went on the disability rolls. And since disability payments vanish if the disabled person starts earning more than $1,170 per month, the disabled tend to stay disabled…. Disability insurance alone doesn’t entirely explain the rise of long-term joblessness—only one-third or so of jobless males get such benefits. But it has surely played a role.

Other social-welfare programs operate in a similar way. Unemployment insurance stops completely when someone gets a job, … [thus] the unemployed tend to find jobs just as their insurance payments run out. Food-stamp and housing-voucher payments drop 30 percent when a recipient’s income rises past a set threshold by just $1. Elementary economics tells us that paying people to be or stay jobless will increase joblessness….

The rise of joblessness among the young has been a particularly pernicious effect of the Great Recession. Job loss was extensive among 25–34-year-old men and 35–44-year-old men between 2007 and 2009. The 25–34-year-olds have substantially gone back to work, but the number of employed 35–44-year-olds, which dropped by 2 million at the start of the Great Recession, hasn’t recovered. The dislocated workers in this group seem to have left the labor force permanently.

Unfortunately, policymakers seem intent on making the joblessness crisis worse. The past decade or so has seen a resurgent progressive focus on inequality—and little concern among progressives about the downsides of discouraging work. Advocates of a $15 minimum hourly wage, for example, don’t seem to mind, or believe, that such policies deter firms from hiring less skilled workers. The University of California–San Diego’s Jeffrey Clemens examined states where higher federal minimum wages raised the effective state-level minimum wage during the last decade. He found that the higher minimum “reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points,” which accounted for “43 percent of the sustained, 13 percentage point decline in this skill group’s employment rate.”

The decision to prioritize equality over employment is particularly puzzling, given that social scientists have repeatedly found that unemployment is the greater evil…. One recent study estimated that unemployment leads to 45,000 suicides worldwide annually. Jobless husbands have a 50 percent higher divorce rate than employed husbands. The impact of lower income on suicide and divorce is much smaller. The negative effects of unemployment are magnified because it so often becomes a semipermanent state.

Time-use studies help us understand why the unemployed are so miserable. Jobless men don’t do a lot more socializing; they don’t spend much more time with their kids. They do spend an extra 100 minutes daily watching television, and they sleep more. The jobless also are more likely to use illegal drugs….

Joblessness and disability are also particularly associated with America’s deadly opioid epidemic…. The strongest correlate of those deaths is the share of the population on disability. That connection suggests a combination of the direct influence of being disabled, which generates a demand for painkillers; the availability of the drugs through the health-care system; and the psychological misery of having no economic future.

Increasing the benefits received by nonemployed persons may make their lives easier in a material sense but won’t help reattach them to the labor force. It won’t give them the sense of pride that comes from economic independence. It won’t give them the reassuring social interactions that come from workplace relationships. When societies sacrifice employment for a notion of income equality, they make the wrong choice. [“The War on Work — And How to End It“, City Journal, special issue: The Shape of Work to Come 2017]

In sum, the rising suicide rate — whatever its significance — is a direct and indirect result of government policies. “We’re from the government and we’re here to help” is black humor, at best. The left is waging a war on white males. But the real war — the war that kills — is hidden from view behind the benign facade of governmental “compassion”.

Having said all of that, I will end on a cautiously positive note. There still is upward mobility in America. Not all working-class people are destined for suicidal despair, only those at the margin who have pocketed the fool’s gold of government handouts.


Other related posts:
Bubbling Along
Economic Mobility Is Alive and Well in America
H.L. Mencken’s Final Legacy
The Problem with Political Correctness
“They Deserve to Die”?
Mencken’s Pearl of Wisdom
Class in America
Another Thought or Two about Class
The Midwest Is a State of Mind

The Real Burden of Government (II)

The proprietor of Political Calculations, harkening back to Irving Fisher, makes a case for personal consumption as the proper measure of national output. Robert Higgs argues that personal consumption is the proper benchmark against which to measure the burden of government spending:

How big is government in the United States? The answer depends on the concept used to define its size. Although many such concepts are available, and several are used from time to time, by far the most common measure, especially in studies by economists, is total government spending (G) as a percentage of the gross domestic product (GDP)….

On reflection, however, one might well wonder why G has been “normalized” so often by measuring it relative to GDP. One reason this practice is questionable is that GDP includes a large part—equal in recent years to about 10 percent of the total—known as the capital consumption allowance. This is an estimate of the amount of spending that was required simply to maintain the value of the nation’s capital stock as it depreciated because of wear and tear and obsolescence. Given that GDP is defined to include only “final” goods and services, it is questionable that expenditures made solely to maintain the capital stock should be included at all, rather than excluded as “intermediate goods,” as a large volume of the economy’s total output is already excluded (e.g., steel sold the manufacturers of machinery, wheat sold to flour mills).

One way around this difficulty is to measure G not relative to GDP, but relative to net national product, which, except for a statistical discrepancy, is the same as the accounting concept known as national income (NI). Using NI as the denominator, for the same period 2010-14, we find that size of government in the United States was 41.4 percent. This figure, however, may still give a misleading impression of the relative size of government because NI includes elements that are more or less remote from the economic affairs of individual households.

After some adjustments to NI, including several deductions (e.g., for contributions to government social insurance) and several additions (e.g., for personal income receipts on assets), we arrive at the accounting concept designated personal income (PI), which, because the foregoing deductions and additions have been almost offsetting, has been approximately the same as NI in recent years. From the total PI, individuals pay taxes, spend a portion (designated personal consumption, C), and save the rest. PI is the income concept that accords most closely with ordinary people’s notion of their income.

Personal consumption outlays, which currently amount to about 95 percent of disposable (that is, after-tax) personal income, are an arguably superior denominator for the measurement of the relative size of government. If we use it as such, we find, for the same period 2010-14, a figure of 52.2 percent. Thus, by a more meaningful measure, total government spending is equivalent not to a little more than a third of the economy (G/GDP) nor to a little more than four-tenths of it (G/NI), but rather to a little more than half of the part of the economy that affords immediate satisfaction to consumers (C/PI).

I would argue that something like PI, rather than C, is the proper benchmark for measuring the burden of government spending. As Higgs says, “PI is the income concept that accords most closely with ordinary people’s notion of their income.”

But I would go a step further and say that the relevant measure of personal income is that part of it which derives from private economic activity: private personal income (PPI). I would therefore exclude from PPI any income derived directly from government employment and government transfer payments (Social Security, etc.).

PPI is a measure of “real” economic activity, in that it reflects the aggregate value of voluntary, mutually beneficial exchanges of goods and services. Government, on the other hand, crowds out and hinders real economic activity, in three ways: spending on government programs, redistributive spending, and regulatory activity. In other words, there is more to government spending than G, the formal definition of which excludes transfer payments. I therefore compare PPI to $Ga, which

represents the observable cost of [governmental activities], including [actual transfer payments and de facto transfer payments disguised as compensation of government employees and contractors], even though they flow into private-sector consumption and investment…. $Ga does not include indirect costs, such as those that are imposed by the regulatory burden….

Without further ado, here’s a graphical comparison of PPI and $Ga*:

PPI vs $Ga

That’s not the end of the story. Regulations impose a huge burden on the U.S. economy. Higgs cites the work of Wayne Crews, “who makes an annual estimate of the cost of compliance with federal regulations alone.” According to Crews, “Costs for Americans to comply with federal regulations reached $1.863 trillion in 2013.” (That’s remarkably close to an estimate for 2008 obtained by a different study, which I’ve cited elsewhere.)

Let’s focus on 2013. In then-year dollars, PPI was $11.4 trillion, $Ga was $6.3 trillion, and the regulatory burden imposed by federal regulations was $1.9 trillion. The sum of these three (mutually exclusive) quantities is $19.6 trillion. PPI accounts for only 58 percent of the sum. And it is safe to say that if State and local regulations were taken into account, PPI would account for no more than one-half of the dollar value of the nation’s potential economic output.

That is a reasonable estimate of the real (economic) burden of government — at the moment. But the cumulative burden is greater than that; decades of government spending and regulatory activity have cut the rate of economic growth almost in half since the end of World War II:

Real GDP by post-WW2 business cycle

__________
* I estimated PPI from Bureau of Economic Analysis, National Income and Product Accounts Tables, Table 2.1, Personal Income and Its Disposition, by adding line 4 (wages and salaries paid by private industries); the portion of line 6 (supplements to wages and salaries) attributable to private employment (line 4 divided by line 3 — total salaries and wages, including government — times line 6); line 9 (proprietors’ income); line 12 (rental income); and line 13 (interest and dividend income).

I estimated $Ga from Table 3.1, Government Current Receipts and Expenditures, by adding lines 35-38: current expenditures, gross government investment, capital transfer payments, and net purchases on non-produced assets.

In both cases, I estimated per capita values by applying the population figures given at MeasuringWorth. I converted all estimates to 2014 dollars by applying CPI-U values obtained from BLS.gov.

 *     *     *

Related posts:
Lay My (Regulatory) Burden Down
Government in Macroeconomic Perspective
The Rahn Curve Revisited
The Slow-Motion Collapse of the Economy

Signature

The Recession Still Lingers

UPDATED 10/30/10

The latest release from the Bureau of Economic Analysis, which includes the “advance” estimate of real GDP for the third quarter of 2010, indicates that the recession isn’t over, by my definition of a recession:

  • two or more consecutive quarters in which real GDP (annualized) is below real GDP (annualized) for an earlier quarter, during which
  • the annual (year-over-year) change in real GDP is negative in at least one quarter.

Real GDP for the third quarter was $13,260.7 billion (annualized rate, chained 2005 dollars). Although that’s better than the second quarter, it remains below the peak of $13,359.0, which was reached in the second quarter of 2008.

Here’s how real GDP has fared from the first quarter of 1947 through the third quarter of 2010 (recessions are denoted by vertical bars):

(In this version of the graph I have eliminated the 1947 recession, for lack of complete statistics, and pushed the beginning of the current recession to an earlier quarter.)

(I have added the following sentence and related graph.) Here’s a closer look at the depth and duration of post-war recessions:

Finally, here are year-over-year changes in real GDP, from the first quarter of 1948 through the third quarter of 2010:

This graph, by the way, updates the one I used in “The Price of Government: More Evidence,” where I say:

You will notice two things about the graph. First, the economy is cyclical, thanks in part to the actions of government (e.g., the low-interest, housing-bubble recession). Second, economic growth has declined from an annual rate of around 4 percent to an annual rate of about 2 percent, because of government.

Related posts:
Economics – Growth & Decline
The Economic and Social Consequences of Government

The Price of Government: More Evidence

It is time to remind everyone of the economic toll that has been exacted by the growth of the regulatory-welfare state since the end of World War II:


Source: Bureau of Economic Analysis.

You will notice two things about the graph. First, the economy is cyclical, thanks in part to the actions of government (e.g., the low-interest, housing-bubble recession). Second, economic growth has declined from an annual rate of around 4 percent to an annual rate of about 2 percent, because of government.

Related posts:
Economics – Growth & Decline
The Economic and Social Consequences of Government

The Real Burden of Government

Drawing on estimates of GDP and its components, it is easy to quantify the share of economic output that is absorbed by government spending. (See, for example, “The Commandeered Economy.”) With a bit of interpretive license, it is even possible to assess the cumulative effects of government spending and regulation on economic output. (See, for example,  “The Price of Government.”)

But the real economy does not consist of a homogeneous output (GDP). The real burden of government therefore depends on the specific resources that government extracts from the private sector in the execution of particular government programs, and on the particular products and services that are affected by government regulations.

Each new or expanded government program raises the demand for and price of certain kinds of goods and services, and channels rewards (claims on goods and services) in the direction of the businesses and persons involved in providing goods and services to government; for example:

  • Social Security rewards individuals for not working. The service, in this case, is the “good feeling” that comes to politicians, etc., for having done something “compassionate.”  The effect is to raise the prices of the goods and services that prematurely retired individuals would otherwise produce, therefore reducing the well-being of the working public.
  • Medicare — another of many feel-good programs — rewards retirees by subsidizing their medical care and prescription drugs. The upshot of this feel-good program is to reduce the well-being of the working public, which must pay more for its medical services and prescription drugs (directly, through higher insurance premiums, or because of lower wages to offset the cost of employer-provided health insurance).
  • R&D conducted in government laboratories and under government grants absorbs the services of scientists and engineers, thus raising the compensation of many scientists and engineers who couldn’t do as well in the private sector (the reward) and reducing the numbers of scientists and engineers engaged in private-sector R&D (the cost). Remember the private-sector inventors, innovators, and entrepreneurs who brought you the telephone, automobiles, radio, television, any number of “wonder drugs,” computers, online shopping, etc., etc., etc.?
  • A goodly fraction of the teachers and professors at tax-funded schools and universities are rewarded with incomes that they could not earn if they worked in the private sector. (Tax-funded education also provides feel-good rewards to the usual suspects, who worship at the altar of statist inculcation.) Given that the “educators” and administrations of tax-funded educational institutions are essentially unaccountable to their “customers,” it should go without saying that tax-funded education delivers far less than the alternative: combination of private schools (including trade schools), apprenticeships, and penal institutions. Moreover, tax-funded education deprives private-sector companies of the services of (some) teachers and professors who have the skills and ability to help those companies to offer better products and services to consumers.

That’s as far as I care to take that list. You can add to it easily, just by selecting any federal, State, or local government program at random.

All of those programs, onerous as they are, have nothing on the insidious regulatory regime that has engulfed us in the past century. Regulation often are the means by which “bootleggers and Baptists” conspire to protect their interests, on the one hand (“bootleggers”), while slaking their thirst for do-goodism, on the other hand (“Baptists”). The classic case, of course, is Prohibition, which enriched bootleggers while making Baptists (and other temperance-types) feel good about saving our souls. You know how well that worked.

Obamacare is a leading example of “bootleggers and Baptists” at work. Insurance companies and the American Medical Association, anxious to protect themselves, lent their support to a program that promises to increase the demand for prescription drugs and doctors’ services. It’s a pact with the devil, of course, because (unless, by some miracle, it is repealed or declared unconstitutional) insurance companies and doctors will find that they are nothing more than government employees, in deed if not in name. And guess who will end up paying the bill? The working public, of course.

Obamacare is not a purely regulatory regime, however, because it revolves around a feel-good giveaway program. For examples of purely regulatory regimes, I turn to the myriad mundane regulations that are imposed upon us for “our own good” and at our own expense, from make-work schemes for electricians and plumbers building codes to death-inducing delays in drug approval the Pure Food and Drug Act.

More notorious (though perhaps not more damaging to the economy) are the federal government’s misadventures in “managing” the economy. A good place to begin is with the Federal Reserve’s actions from the late 1920s to the early 1930s, which helped to bring on the stock-market bubble that led to the stock-market crash that led to a recession that (with the Fed’s help) turned into the Great Depression. A good place to end is with the recent financial crisis and deep recession — a creature of Congress, the Fed, other federal suspects too numerous to mention, plus Freddie Mac and Fannie Mae — their pseudo-private-bur-really-government co-conspirators.

Have you had enough? I certainly have.

The growth of government and its incursions into our personal and business lives during the past century has done far more than rob us of wealth and income. It has ruined our character and our society, and deprived us of liberty. What has happened to self-reliance, social networks, private charity, and civil society in general? What has happened to plain old liberty, which is a value unto itself? That they are not gone with the wind is due only to the tenacity with which (some of us) hold onto them.

Government grows in power and reach because every government program and regulation — even the most benighted of them — creates a vested interest on the part of its political sponsors (in and out of government), bureaucratic managers, and dependent constituencies. New suckers are born every minute who believe that they can join the gravy train without paying the piper (to mangle a few metaphors). And when the problems created by government become too obvious to ignore, the conditioned response on the part of politicians, bureaucrats, their dependent constituencies, and most of the public is to find governmental solutions to those problems. It is the ultimate vicious circle.

Government is the problem. And it will be the problem for as long as it does more than merely protect its citizens from domestic and foreign predators, so that they can enjoy liberty and its fruits.

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Related posts: Too numerous to mention. Begin with this list of posts at Liberty Corner, then start at the beginning of Politics & Prosperity, work your way to the present, and stay tuned.