June 29, 2004
Apples and oranges
This is the crux of Frum's argument:
"Where did that extra production go? That’s the question answered by the second number, 45%. The lion’s share of Canadian economic growth in the 1990s was pocketed by government, especially the federal government. Between 1993 and 2003, federal revenues rose by 45%, or almost $60 billion.Hmm. "Lion's share." This is the crux of DeLong's argument:
To put it another way, Frum's numbers imply that Canadian federal revenues were 18% of GDP in 1993, and are only 16% of GDP today. If politicians Frum liked had been in power over those years, he would now be ferociously and loudly roaring about the conservative policies that have successfully shrunk the relative size of government.
Thus Frum's argument is very obviously wrong if Brad's calculations are correct. The government is not taking the lion's share of the economy. It's share under Martin has actually shrunk. To which you say, Mustafa:
However, I was trying to point out the incorrect analysis of Frum's position by showing that he is correct in arguing that government took more of the economy's growth than people and that Martin held people's income down through taxation.But this isn't true. It took less. That's because the percentages are percentages of different things. They're apples and oranges. 31% per capita vs. 45% of federal revenues. These things are not comparable, and that is the fallacy in Frum's argument.
Let's take an extreme case: suppose Federal Revenues were only a dollar (against trillions going into people's pockets). Then suppose these percentages were still valid. Now the federal government is only getting $1.45. Now how can you say that government took "more of the economy's growth than people" or that "Martin held people's income down through taxation"? The fact is that these percentages themselves have no direct bearing on the distribution of growth between ordinary folks and the government! Which is what DeLong was pointing out.
So then you conclude,
The government increased taxes over the course of 1993-2003 increasing government revenue more than the personal incomes of Canadians. Frum's argument, despite its biased rhetorical flourish, is correct.From the above, the statement "increasing government revenue more than the personal incomes of Canadians" itself is meaningless. By what measure? Percentage of GDP? DeLong shows that this is false.
Finally,
Some of this money was wasted, given to friends of the Liberal Party, and pocketed by politicians. As such, taxes should not have been raised as much as they were.Fine. As you note, this is a value judgement. I could just as well say that this money should have been spent on social programmes or whatever. As I do. But I also acknowledge that all large entities have frictions that are sometimes the price of their synergistic benefits. It's a matter of opinion how much is tolerable.
It's not just a matter of "Fair Share." It's whether David Frum is right. And he is not. It's not just a rhetorical flourish, it's silly (wrong) logic, the same kind of logic that led him and his ilk to develop the failing theories that tried to conquer Iraq.
Archive URL for this entry: http://www.pointsofinformation.ca/archives/individual/2004/06/29/Mandos_apples_and_oranges_172.html
TrackBack URL for this entry: http://www.pointsofinformation.ca/poi-ping.cgi/143
