10 Statist Myths Debunked

1.) Taxes help grow the economy.

Bloomberg:

In a study of 44 large fiscal adjustments in 24 advanced economies since 1975, Broadbent and Daly discovered that reducing expenditures by 1 percentage point a year boosted average annual growth by 0.6 percentage point. Raising the ratio of taxes to GDP by the same margin cut growth by an average 0.9 percentage point.

Wall Street Journal:

In addition to Washington, the states without an income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Combined they had an average 18.2% growth rate in jobs over the past decade, more than twice the 8.4% job growth of the nine states with the highest income tax rates.

2.) Privatization doesn’t work.

World Bank:

A detailed and rigorous Bank examination of 12 privatizations in four countries found that divestiture was good for the economy as a whole--and led to higher productivity and faster growth in all but one case. […]The Chilean telephone company doubled its capacity in the four years after sale. […]Another study found that 41 firms privatized by public offerings in 15 countries […]increased returns on sales, assets, and equity, raised internal efficiency, improved their capital structure, and increased capital expenditures. They also expanded their workforces by small margins.

3.) The government is needed to build roads.

How Capitalism Saved America by Thomas DiLorenzo:

Louisiana began subsidizing railroads before Illinois and most other states (in 1833) and consequently was on of the first states to forbid state aid for internal improvements (in 1845). The failures of government-subsidized internal improvements were so pronounced that by 1860 Missouri and Massachusetts were the only two states in the union that had not yet amended their constitutions to prohibit internal improvement subsidies. Missouri finally got around to it in 1875.

4.) The Americans with Disabilities Act has primarily helped the disabled.

Cato:

Table 1 compares changes in the employment rates of disabled and nondisabled men before and after enactment of ADA. Employment of men with disabilities fell by 10.9 percentage points following the enactment of ADA, while employment of nondisabled men fell by 3.1 percentage points. Thus, ADA reduced the employment of disabled men by 7.8 percentage points.

5.) Licensing is good for the economy.

Econ Journal Watch:

[A] 2006 Gallup survey found that 29 percent of the workforce was required to hold a license from a government agency. […]Dorsey (1983, 171) finds that “licensing regulations exclude less educated and minority workers more than proportionally.” […]Kleiner and Krueger (2008) find that licensing is associated with a 15 percent wage premium.

6.) To reduce crime, people should not have fire arms.

National Review:

In the five years before Washington's ban in 1976, the murder rate fell from 37 to 27 per 100,000. In the five years after it went into effect, the murder rate rose back up to 35. […]Chicago's murder rate fell from 27 to 22 per 100,000 in the five years before the law and then rose slightly to 23. […]Chicago's murder rate fell from being 8.1 times greater than its neighbors in 1977 to 5.5 times in 1982, and then went way up to 12 times greater in 1987.

7.) The police state is good for you.

Harpers:

The FBI issues roughly 50,000 [National Security Letters] a year, and the Justice Department’s own internal review in 2007 concluded that many of them were issued abusively, skirting the law and internal rules. The idea is simple: the device is something like a subpoena, though it doesn’t require approval of a judge to issue.

8.) FDR saved us from the Great Depression

Wall Street Journal:

The economic fundamentals that drive all expansions were very favorable during the New Deal. Productivity grew very rapidly after 1933, the price level was stable, real interest rates were low, and liquidity was plentiful. […]So what stopped a blockbuster recovery from ever starting? The New Deal. […]The most damaging policies were those at the heart of the recovery plan, including The National Industrial Recovery Act (NIRA). […]The NIRA covered over 500 industries, ranging from autos and steel, to ladies hosiery and poultry production. Each industry created a code of "fair competition" which spelled out what producers could and could not do, and which were designed to eliminate "excessive competition" that FDR believed to be the source of the Depression. […]We have calculated that manufacturing wages were as much as 25% above the level that would have prevailed without the New Deal.

9. “Obamacare” covers pre-existing conditions

Firedog Lake:

Access to the “high risk pool” is limited and the pool is underfunded. It will cover few people, and will run out of money in 2011 or 2012. Only those who have been uninsured for more than six months will qualify for the high risk pool. Only 0.7% of those without insurance now will get coverage, and the CMS report estimates it will run out of funding by 2011 or 2012.

Washington Post:

18 states have officially declined to participate in the new high risk pools, which offers a subsidized insurance option to those with pre-existing conditions.

10. Government workers have it rough.

NY Post:

From January 2008 to January 2010, private-sector jobs plunged from 115.5 million to 106.8 million. But the number of federal, state and local public employees climbed up a tick, from 22.3 million to 22.4 million. […]In 2009, […]compensation for the average federal civilian worker totaled $123,049 including benefits valued at $41,791. That's more than twice what the average private-sector employee earned -- only $61,051, including benefits.