Contributor Post Created with Sketch. More like Hong Kong, Less like Brazil

 

This week, Ben Smith reported in Politico that Secretary of State Hillary Clinton aspires to make the United States more like Brazil. According to Ms. Clinton:

The rich are not paying their fair share in any nation that is facing the kind of employment issues [America currently does] – whether it’s individual, corporate or whatever [form of] taxation forms…Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what – they’re growing like crazy. And the rich are getting richer, but they’re pulling people out of poverty.

If you aren’t yet familiar with the Heritage Foundation’s marvelous 2010 Index of Economic Freedom, I highly recommend it. A few raw comparisons from the index:

  • The freest country, Hong Kong. 5.7% 5-year compound annual growth. 4.4% unemployment. Tax rates that are among the lowest in the world with a tax-to-GDP ratio of 14.2%.
  • The eighth freest country, the United States. 2.2% 5-year compound annual growth. 9.9% unemployment. Burdensome tax rates with a tax-to-GDP ratio of 28.3%.
  • The 113th freest country, Brazil. 4.5% 5-year compound annual growth. 7.3% unemployment. Tax-to-GDP ratio of 35.3%.

That anyone could look at that dramatic comparison and decide, “Gee, we really ought to try to be more like Brazil — they’ve got it going on!” I find simply befuddling. 

There are 12 comments.

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  1. Joe Escalante Contributor

    Brazil is amazing on the surface; Rio, Mardi Gras, Meat ambush restaurants (churrascarias), the Amazon. But when you do business there you have to factor in how much will be boldly stolen from you as a cost of doing business. At times it seems like just one big criminal enterprise awarded it’s own country code. They are prisoners of their own crime problems. Most car rides I’ve been on down there have involved the driver running every red light for fear of being car jacked in broad day light. I can’t wait.

    Granted, I’m doing music business down there but here the criminals at least let you have the time before you get your first statement to believe you’re not getting robbed.

    • #1
    • May 30, 2010, at 4:27 AM PDT
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  2. Harlech Inactive

    We can learn lessons from lots of places, including Brazil and Hong Kong.

    • #2
    • May 30, 2010, at 4:36 AM PDT
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  3. Profile Photo Member

    She’s a monster.

    • #3
    • May 30, 2010, at 5:40 AM PDT
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  4. PJS Thatcher
    PJS Joined in the first year of Ricochet Ricochet Charter Member

    Have you actually been to Brazil? I have visited twice in the last two years, once through Sao Paulo, once through Rio. The place is filthy, poverty unlike anything seen in the US. Friends in Rio live behind high walls with razor wire and broken glass along the tops, leaving only in armoured cars with bodyguards. As one drives in from the airport to either city one passes through garbage-strewn, tumble-down slums and shanty-towns that seem to go on forever. How this mess of a country will pull off the FIFA World Cup and then the Olympics is beyond me. Yeah Mrs. Clinton, I’d loooooooove to live like that. And don’t even get me started on the poverty in the countrysides.

    • #4
    • May 30, 2010, at 6:26 AM PDT
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  5. Harlech Inactive

    Yes, I’ve been to Brazil. Have you ever watched the entire first season of the Sopranos in a single weekend?

    • #5
    • May 30, 2010, at 6:49 AM PDT
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  6. Steve Manacek Contributor

    Perhaps Secretary Clinton is misled by having only read the Heritage Index (I’m sure she’s a regular reader) — or by never having been to Brazil? If you just look at the Heritage data, Brazil has 2x the growth rate of the U.S. and a 25% lower unemployment rate. Maybe marginally higher tax rates and less economic freedom aren’t so bad…. The problem is that not only is Brazil poverty-ridden and crime-ridden (as noted), but that it is — given its size, population, and wealth of natural resources — a hugely underdeveloped, immature economy. Of course it can “grow like crazy” — it’s starting from such a relatively small base. What did the comparable figures look like for the U.S. in — oh, say, the 1870s, or whenever the U.S. was at the same state of underdevelopment as Brazil is today? A heckuva lot better than Brazil’s, I’d wager. And I wonder what Brazil’s growth rate and unemployment rate would look like today if they had the EPA, OSHA, and all the other luxuries mature, developed economies indulge in. I wonder if that’s a trade-off Secretary Clinton would be interested in….

    • #6
    • May 30, 2010, at 7:44 AM PDT
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  7. Aaron Miller Member
    Aaron Miller Joined in the first year of Ricochet Ricochet Charter Member

    Another good resource for considerations like these is the CIA World Factbook. One can quickly find information like population size, major industries, and public debt.

    • #7
    • May 30, 2010, at 8:46 AM PDT
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  8. John Boyer Member
    John Boyer Joined in the first year of Ricochet Ricochet Charter Member

    “The rich are not paying their fair share in any nation that is facing the kind of employment issues [America currently does]…”

    I’ve never understood what liberals think is fair for the rich to pay…other than more than they are currently paying now.

    It’s odd and wrongheaded to state that the rich have the obligation to improve the economy and increase employment by paying more money to the government. As we have seen with the stimulus, government spending that money won’t create substantial numbers of jobs. Nor will using the rich’s tax money on entitlement programs actually put people to work–other than government bureaucrats who sign the unemployment/welfare checks.

    • #8
    • May 30, 2010, at 9:38 AM PDT
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  9. Duane Oyen Member
    Duane Oyen Joined in the first year of Ricochet Ricochet Charter Member

    Ah, but they use a lot of ethanol to drive, so they are greeeeeen……

    • #9
    • May 30, 2010, at 9:56 AM PDT
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  10. Profile Photo Member

    Ms. Clinton obviously is not familiar with causation. She asserts an alleged causal link between Brazil’s high tax-to-GDP rate in the Western Hemisphere and its growth. However, assertion is separate from demonstration. She has yet to demonstrate that there is in fact a causal link between high tax-to-GDP rates and economic growth. It doesn’t occur to her that perhaps economic growth can exist despite high tax-to-GDP rates.

    • #10
    • May 30, 2010, at 9:57 AM PDT
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  11. John Boyer Member
    John Boyer Joined in the first year of Ricochet Ricochet Charter Member
    Michael Labeit: Ms. Clinton obviously is not familiar with causation. She asserts an alleged causal link between Brazil’s high tax-to-GDP rate in the Western Hemisphere and its growth. However, assertion is separate from demonstration. She has yet to demonstrate that there is in fact a causal link between high tax-to-GDP rates and economic growth. It doesn’t occur to her that perhaps economic growth can exist despite high tax-to-GDP rates. · May 29 at 9:57pm

    An excellent point Mr. Labeit.

    • #11
    • May 30, 2010, at 10:01 AM PDT
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  12. Andrea Ryan Member
    Andrea Ryan Joined in the first year of Ricochet Ricochet Charter Member

    Michael Labeit: Ms. Clinton obviously is not familiar with causation. She asserts an alleged causal link between Brazil’s high tax-to-GDP rate in the Western Hemisphere and its growth. However, assertion is separate from demonstration. She has yet to demonstrate that there is in fact a causal link between high tax-to-GDP rates and economic growth. It doesn’t occur to her that perhaps economic growth can exist despite high tax-to-GDP rates. · May 29 at 9:57pm

    Someone should demonstrate the Laffer Curve to Hilary. It shows the relationship between tax revenue and tax rates and the balance at which you achieve maximum revenue. And it ain’t taxing the holy heck out of the “rich”.

    http://www.heritage.org/Research/Reports/2004/06/The-Laffer-Curve-Past-Present-and-Future

    • #12
    • May 31, 2010, at 1:43 AM PDT
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