The Nanny States

Yesterday we looked at Japan’s bummer economy, and noted that while Nippon is in neutral, it’s on a healthier economic road than most of the world is. As a basis of comparison, I mentioned England, Canada, New Zealand, and Australia, all which are poster children of western European style socialism. I call these economies the “nanny states” because their people are seemingly incapable of breathing unless they’re suckling the milk of government programs of one stripe or another. The government is a national nanny, the people are gutless sheep who need to be herded every step along the way.

Indeed, perhaps Japan’s “crony capitalism,” which is conspicuously at work in much of Asia, isn’t as destructive as the “market oriented” breed of socialism practiced by the nanny states. Of course, crony capitalism is linked to socialism, inasmuch as it involves the government controlling the flow if capital. But why trouble our head with such distinctions? The cogent note is that the Crony Capitalism charge is often hurled at Asia by many non-Asians, while the heavy hand of government in ethnically European societies is conveniently overlooked.

Overlooked, that is, until now. Let’s shine some light into the economic shadows, and see how Japan measures up against the nanny states (and it measures up very well, we will find).

Time to introduce our old friend, “per capita Gross Domestic Product.” This is a reflection of how much economic output the average resident cranks out in a year. It’s the broadest, and most common, yard stick to compare how much economic muscle Mr. and Mrs. Average wield.

When using this yardstick to see how different countries measure up against each other, it’s useful to make some adjustments for price levels in those countries. For example, you can probably buy a dinner in the Philippines for less than it costs to get a cup of coffee in Tokyo. A consumer’s economic situation is therefore a function not only of production and income, but of price levels as well.

Fortunately, legions of pointy-headed econometricians have solved this problem, and cooked up the “Purchasing Power Parity” (PPP) wrinkle. This adjusts per-capita GDP for a nation’s cost of living, and gives us a rough measure that we can apply to various countries. It’s a problematic index, to be sure, but used correctly it is meaningful.

Using per-capita GDP adjusted for PPP, how does Japan stack up against the nanny economies? It outdoes them.

Japan’s per-capita GDP adjusted for PPP is $23,105, which is 2.3 percent higher than Canada ($22, 585), 11 percent higher than Australia ($20,820), fully 14.3 percent higher than England ($20,210) and a whopping 38.5 percent higher than New Zealand ($16,680).

So the next time you’re subjected to some sanctimonious drivel by some sniveling ward of a nanny state, bleating about the “lack of a safety net” (i.e. not a big enough welfare state) in Japan or other industrial Asian countries, keep in mind that the nanny states fall short of Japan’s economic success. And I can’t help but mention that the nanny states pale in comparison to Hong Kong (per capita GDP at PPP of $24,550) and mighty Singapore ($28,235).

It is, then, time for the nanny state crowd to quit browbeating its economic betters in Asia.