Or, alternatively is Jeff Sachs right on the success of welfare states? In Scientific America, Sachs looks at the Nordic welfare states as compared to the English-speaking market economies and finds that the welfare states outperform on basic economic measures the market economies.
I am going to be looking into this a lot more closely, but my priors on any of these sort of comparative analysis is that aggregate measures both underestimate and overestimate the situation. They overstate the extent of state interference in the welfare states due to the extent of tax evasion and underground market activity, and they understate the true extent of state interference in so-called market economies.
Regardless, Sachs raises an important empirical puzzle that we must explain. I believe that his analytical perspective does not lend itself to addressing the puzzle effectively (and certainly his claim to be non-ideological is an act of self-delusion). But we cannot answer this question with analytical debate only, but must dig deep into the historical record to get at the details of economic life in both the Nordic welfare states and the market economies of the US, UK, Australia and NZ.
What would be your alternative explanation for the "facts" that Sachs reports?
Read Sach's full article from his web-ste for the Earth Institute at Columbia.
Thanks to Mark Skousen for bringing this article to my attention.
10/24 -- UPDATE:
Thanks for the comments they point in a variety of interesting directions for further research. I should point, however, that Sachs is also misreading Hayek's Road to Serfdom thesis --- a point which Samuelson did as well and had to eventually send Hayek a letter of apology and retraction for what he had written in his textbook. Hayek has his own discussion of Sweden in the preface to the 1976 edition of The Road to Serfdom, and Ulrich Witt has a quite fascinating paper in Public Choice on the role of the endogenous public choice theorist in public choice analysis. I have a paper which touches on these issues as well in the European Journal of Political Economy.
But lets take the challenge from Sachs head on. Bob Subrick over at Stationary Bandit has looked at the numbers and raises some great points on Sachs's own terms which question his conclusion.