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There’s a (greek) article circulating on the internet during the last few days based on an older Mises post from May 2015 which analyses how 67% of the Greek population depends on public funding which is obviously provided by taxing the remaining 1/3.

The essence of the above article can be summarized in the graph below which is supposed to show the percentage of population reliant on public funding for various countries:

population reliant on public funding by country

Although the article does not really bother to describe in detail how the graph is created or which year it refers to I will assume that it is based on 2014 data (since it first appeared on the Internet in 2015) and try to roughly recreate the relevant metric for Greece but explore it in historical terms.

The main argument of the Mises post is that public employment and pensions are reliant on private sector taxes and pension contributions and should thus be considered «a burden». Since I want to keep the data simple and easily accessible I will assume that pensioners are those over 65 years old and public employment the sum of «public administration and defence», «health services» and «education» from the Employment Survey. According to the latter, the sum was roughly 800 thousand persons at the end of 2014 which I will regard as constant due to data availability at FRED.

Based on the above a rough estimate of the percentage reliant on the private sector will be «1 – (employment – 800,000) / population over 15 years old» which is shown in the graph below (FRED only has data starting at 1998):

Greece population dependant on private employment.png

What is evident is that this percentage was over 50% already before the introduction of the Euro and started decreasing after 1999 reaching 48% in 2008 (from 54% in 1999) mainly driven from the increase in private employment. It shot through the roof during the Greek Great Depression to the level of 62% in 2013 because of the increase in unemployment. This is the point in time when Mises took «a picture» of this percentage to make its argument.

It is almost a tautology that in a country with more than 25% unemployment and another 20% of the population being over 65 years old a large part of the population will be reliant on those left working for its income and basic needs. Mises (circular) argument is more or less that the large unemployment in Greece is due to… people being massively unemployed. The fact that Greece has a structural primary balance of over 6% obviously seems to not play any role.

 

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