Friday, April 18, 2014

The underlying difference between spending in the United States and Germany

I wish to address the idea that Germany is a socialist state and the United States is not.

This is a cross-sectional study comparing the difference in the finances of Germany and the United States today. I look at the list of countries by government expenditure as percent of GDP (which excludes transfer payments, such as social security) and Germany comes in at 19% and the US comes in at 16%. The largest countries in the world by government expenditure as percent of GDP are Lesotho at 38%, the Netherlands and Denmark both come in at 28%, and South Sudan, Sweden and Zimbabwe at 27%.

The gist of the story is, when you exclude transfer payments from government spending from GDP (and you should because including transfer payments makes absolutely no sense when you get down to the nitty gritty parts of what you are actually calculating) you find that the so called "socialist states" of Europe actually don't spend that much more than the United States. We just spend it on our military and things that don't help people. World Bank In terms of actual numbers there is very little difference in terms of actual spending by the government. Simply, if the government gives cash to someone it is a transfer payment, and if it gives a service it is part of GDP. Most of their budget is just moving money from person a to person b, which is a transfer payment, because those are not transfer payments and are calculated as part of GDP.

So, if Germany is a socialist state, so is the United States. The difference is not in the amount of spending, but who gets it, which doesn't matter at all when it comes to what the word socialist actually means. The best part of this is most of the increases in spending are mostly military and belong to the Republican party who have been increasing our military spending whenever they get the chance, or the incredible amount in our spy complex which is mostly privatized, or other programs which do not help most Americans.

Myth busted.

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