"I Just Hate Obama."

"It ain't what you don't know that gets you into trouble.

It's what you know for sure that just ain't so."

                          Mark Twain





I was recently reminded of a lunch I had during the nineties with the founder of a conservative Christian business ministry.  He startled me by confessing, "Gary, I know it isn't Christian, but I hate Bill Clinton." This time I was having dinner with a very close Christian friend who echoed the sentiment by saying, "I just hate Obama."  I fully expect that there were radically progressive Christians who probably said the same about Presidents Reagan and "W" but perhaps as  I live in the deep south,  I just never met any. So this isn't meant to be political but economic and moral.

We're dear friends and I often kid this second person about being so opinionated. So I was comfortable enough to ask, "why?" My friend replied, "Because he's a socialist, wants America to be socialist and socialism has never worked anywhere in history." Now I've long preferred a political-economy that's more guided by Judeo-Christian ethics and charity than government regulation and welfare. But I know Forbes annually says the very wealthy tend to give far more to symphony halls, museums and Ivy League colleges than the needy. I also know my friend's opinion about socialism, widely shared and believed by my conservative friends that it might be, is simply one of those things that many "know for sure that just ain't true," as Mark Twain said. As he also said, such political illusions, on both sides of the aisle, has coarsened our country's political discourse lately. So it might be good to check some facts.

For example, I asked if it would surprise my friend to hear that only the week before, The Economist  published a special section on why the Scandinavian countries of Northern Europe, whose tax rates are nearly twice as high as America's (see chart below, labeled "Bottom of the Bracket," from the January 25, 2013 issue of The Financial Times), are likely the models the world is looking for now that Ayn Rand-style capitalism nearly destroyed Wall Street in 2009 and more statist forms of socialism are now failing Southern Europe. I explained that even Forbes magazine, The Capitalist Tool, wrote admiringly years ago about Denmark's economy and its people are well-known to be quite happy, despite the taxes they pay.  

 

My friend simply replied that Finland has the highest suicide rate in the world. I replied I knew many experts believe Finland has the best education system in the world, but I'd never heard the suicide part. My friend insisted it was true. So I changed the conversation. But my curiosity was aroused and when I got home, I Googled the world's suicide rates, as published by the World Health Organization. Finland actually ranks nineteenth in the world. The US ranks thirty-fourth, just ahead of Sweden at thirty-fifth and Denmark at thirty-sixth. Not much of a pattern there by which to make political judgments. Still, it played a key role in my friend's thinking about our president and the future of our political-economy.

So I also Googled the well-known "Human Development Index (HDI)," which measures quality of life factors as well as GDP. There are two tables for this. One simply averages the numbers. The US looks pretty good in this survey, ranking fourth after Norway, Australia, and the Netherlands. The other survey adjusts for inequalities. Some prefer this measure with global inequalities growing. The simple reason, to use an exaggeration for effect, is that it may not be all that important if Bill Gates has his own private hospital if millions can't afford to go to one. And in this survey, the US actually ranks twenty-third in the world, not too far ahead of developing markets like Mexico and Turkey.  

Interestingly, Norway retains first place in this survey and Australia retains second. But Sweden moves up to third, with the Netherlands taking fourth, Iceland fifth, Ireland sixth, Demark eighth, and Finland eleventh. Now a pattern emerges. Along with the Forbes and Economist articles, it doesn't exactly affirm the political view that socialism has never worked anywhere at any time. Yet that misconception apparently still causes many Christians to act in a decidedly non-Christian fashion by hating rather than loving.

So perhaps it's worth spending five minutes exploring why The Economist thinks there may be something to learn from Scandinavia. That might explain why I've long written a social democrat like President Obama might take us toward that model, assuming he could with the help of the Congress, Supreme Court and electorate. The Economist said:

"Sweden has reduced public spending as a proportion of GDP from 67% in 21993 to 49% today [America's is a bit over 30%]...Its public debt fell from 70% of GDP in 1993 to 37% in 2010, and its budget moved from an 11% deficit to a surplus of 0.3% over the same period. This allowed a country with a small, open economy to recover quickly from the financial storm of 2007-08. Sweden has also put its pension system on a sound foundation. Most daringly, it has introduced a universal system of school vouchers and invited private schools to compete with public ones. Private companies also vie with each other to provide state-funded health services and care for the elderly. There can be no doubt that Sweden's quiet revolution has brought about a dramatic change in its economic performance.

Denmark has one of the most liberal labor markets in Europe. It also allows parents to send children to private schools at public expense and make up the difference in cost with their own money. Finland is harnessing the skills of venture capitalists and angel investors to promote innovation and entrepreneurship. Oil-rich Norway is a partial exception to this pattern, but even there the government is preparing for its post-oil future. This is not to say that the Nordics are shedding their old model. They continue to pride themselves on the generosity of their welfare states.  About 30% of their labor force works in the public sector, twice the OECD average. They continue to believe in combining open economies with public investment in human capital. But the new Nordic model begins with the individual rather than the state. It begins with fiscal responsibility rather than pump-priming: all four Nordic countries have AAA ratings and debt loads significantly below the euro-zone average [which is significantly below the US itself.]

There are compelling reasons for paying attention to these small countries on the edge of Europe. The first is that they have reached the future first. They are grappling with problems that other countries too will have to deal with in due course, such as what to do when you reach the limits of big government and how to organize society when almost all women work. The second reason is that the ne Nordic model is proving strikingly successful. The Nordics dominate indices of competitiveness as well as of well-being. The Nordics do particularly well in two areas where competitiveness and welfare can reinforce each other most powerfully: innovation and social inclusion. The Nordics also have a strong record of drawing on the talents of their entire populations, with the possible exception of their immigrants. They have the world's highest rates of social mobility: in a comparison of social mobility in eight advanced countries by the London School of Economics, they occupied the first four places. America and Britain came last."

My conclusion?  If more Americans would only practice Christian humility and love rather than political pride and hatred, we might develop a more prosperous, just and peaceful place for our grandchildren to live. But that requires us to know what we're talking about when we talk politics.

Unfortunately, the confusion over Europe is not the only possible misperception the more sophisticated financial media has worked to clear up recently, even if it was ignored by the mainstream media. Bain & Co., the consulting firm often associated with presidential candidate Mitt Romney, recently released a report entitled "A World Awash In Money." Bain estimates there is currently $600 trillion of financial assets flowing around our world. It also estimates that will grow to $900 trillion by 2020. Of course, that probably dismisses the politicized fear that America will never be able to finance its projected $20 trillion federal debt. My guess is the government of the world's wealthiest nation with the world's reserve currency will be able to borrow around 2% of the world's capital for its needs, especially as it was just recently estimated there is over $120 trillion of recoverable oil and gas reserves under federally owned land alone. It's also my guess that's why Mr. Romney never mentioned the statistic on the campaign trail. I can only guess that Democrats never mentioned that reality as they don't know about it.

There's one other little known fact The Economist discussed recently that could be quite important to you. Most Americans don't know it but America has long been an off-shore tax haven for most of the rest of the world. Since the Reagan years, our banks haven't had to report to other nations, with the primary exception of Canada, when a foreign resident earns interest here. That has essentially made deposits in America tax-free. That has made America's cost of borrowing very low and assured we could borrow all we need. But The Economist has just published another special study on off-shore tax havens. It clearly details America's role in that matter. And deep within the report, it says the Obama administration changed that policy last month over the strong objections of bankers in Florida and Texas who fear cheap money will return to Latin America and elsewhere. Similar objections were voiced by the US Chamber of Commerce, which obviously fears cheap money will grow more costly for business.  One might assume the business leaders of the Chamber would be happy to see America borrow less from foreigners. But they're apparently only opposed to our government borrowing from them.

The big picture is one of continuing confusion and cross-currents. The Fed is still trying to stimulate the economy. The central banks of the world have Wall Street and corporations awash in money. Relatively little of that has been getting to Main Street however. Meanwhile, the Republicans in Congress seem bent on austerity. And now the Obama administration is making the US a less popular destination for foreign money, probably in a bet that there's even more American money that it can make return home. I can only conclude all this is a good example of why the Bible says God's thoughts are not humanity's thoughts!

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Gary Moore has a degree in political science and is a Sarasota-based investment counselor who has authored many publications and articles on the morality of political-economy and personal finance. He is a registered representative of, and offers securities through, National Planning Corp (NPC), member FINRA/SIPC, but opinions expressed here are his alone. The Financial Seminary and NPC are separate and unrelated. His comments are included in the More Good $ense newsletter in an effort to expand stewardship leaders’ understanding of broader economic issues.