October 18, 2004

Data Points

I don't recall this New York Times article getting much play when it came out a few days ago:
In the annual global competitiveness rankings of the World Economic Forum, released on Wednesday, Finland was the world's most competitive economy, and Sweden, Denmark, Norway and Iceland were 3rd, 5th, 6th and 10th, respectively.

In the "Doing Business'' report, released by the World Bank, Denmark, Finland, Norway and Sweden were ranked near the top as well. The United States was ranked No. 2 on both lists.
So, ahem, weren't we (ie: we right-thinking individuals) all concerned that those social democratic states, with their elephantine welfare systems, are terrible places to do business. Or not competitive. Or something?

One cavil: The Times coverage doesn't really distinguish between types of welfare regimes. If you look closely at the actual report, though, you see that European states with a corporatist welfare state (France, Germany, Belgium, Austria) don't do nearly as well on the world stage. Meanwhile, some liberal states do very well (The United States and Canada, for instance), while others do quite poorly—Ireland, which has among the lowest taxes of any EU country, ranks only 30th on the list. Chile, meanwhile, ranks 22nd, the best of any Latin American country, even after being "bogged down" by rigorous labor legislation and generous safety nets. (On the other hand, the country has also privatized its Social Security system, sending domestic savings through the roof—25 percent last time I checked. So who knows.)

I'll have to play around with the list some more. This doesn't prove one thing or the other. (Ireland, for instance, has made out pretty well ever since it introduced the 10 percent corporate tax rate in the '80s.) But golly, it sure adds a pretty significant set of data points to the welfare v. competitiveness debate.
-- Brad Plumer 4:10 PM || ||