Sweden's current face of big government didn't start until the 60s when all the companies except Mysql were already large.

For more see Johan Norberg's writings on this: http://www.johannorberg.net/?page=articles&articleid=45

The economist Mauricio Rojas wrote a very detailed analysis of the Swedish Economy and the Welfare State throughout history, which is available here: http://www.timbro.se/bokhandel/pdf/9175665891.pdf

I haven't read the full report yet, but it looks very interesting.

We have to be careful about the education as being treated as the golden ticket for growth. I believe a combination of good primary education and a strong research culture is of vital importance to growth, but without the right infrastructure for entrepreneurs it wont do anything.

Just look at all the people educated to the nth degree in failed communist economies to see what I mean. Also see the reoccurring debates here about the value of higher education for an additional counter point to education.

Sweden by the way were pioneers in using School Vouchers, something that the Democratic party in the US is heavily against.

The United States has a large amount of military spending and redundant bureaucracy, so we have high taxes and low social benefit. For example, the US is usually either #1 or #2 in the world in the amount of money spent per pupil in public schools, and yet the results are not good.

It seems ( I have no data to back this up) that the efficiency of bureaucracy decreases exponentially with it's size. This is obviously a bigger problem for large countries such as the US. There are advantages to size (setting the global agenda, advantages in areas where absolute amounts of money matter (for instance military - your military is twice as good if you spend twice the money no matter how large your population. Roughly...) . , etc.). Whether these advantages outweigh the disadvantage of a large bureaucracy I don't know.

There is something to be said for the design choice of federalism; pushing all possible decisions down to the smallest unit of population effected. However, our government has moved away from this since the Roosevelts time in power.

European Commission that basically runs European Union (500M people) has just around 25,000 employees [1].

This is tiny. Just to get an idea about the scale: New York City (8M people) government employs 250,000 people (though to be fair, I have no idea who is included in this total) [2].

EC seems to be doing something very right. They offer very good working conditions (pay, holidays, benefits, security), so they are able to attract good people. There is a tough competition for these civil servant jobs.

[1] http://en.wikipedia.org/wiki/European_Commission

[2] http://en.wikipedia.org/wiki/Government_of_New_York_City

Because they are massively, massively corrupt.

http://www.timesonline.co.uk/tol/comment/columnists/guest_co...

"For nine consecutive years the EU court of auditors has refused to sign off the budget. The numbers are huge. The annual EC budget is around ¤100 billion (£65 billion). The auditors cannot clear 95 per cent of that. We simply cannot tell what is happening to that money"

Or to put it another way, if this is true, it means that they are able to run real EC functions with just 5 billion Euro budget. That would quite efficient indeed.

My whole point was about low ranking civil servants that do the bulk of the nitty-gritty administration work and that all must pass through a highly selective competitive exams (1 in 29 applicants [1] cf. Harvard's 1 in 14 [2]).

And for these people, from my limited anecdotal evidence I got impression that they are indeed efficient, at least for bureaucracy standards.

[1] http://en.wikipedia.org/wiki/EPSO

[2] http://en.wikipedia.org/wiki/Harvard#Admissions

For example, http://www.tfl.gov.uk/corporate/about-tfl/investorrelations/... shows that Transport for London (buses, trains and underground) alone employs about 18,000 people (and probably quite a bit higher now).

I've seen this commercially, too: large company buys small-medium company because it's good for both companies, even though it's demonstrably bad for employees and products of both. It's a tail-wags-dog situation.

What I was talking about is what economists call a true public service. This is a service that doesn't diminish in value when you add more users - a light tower is the classic example: The lighttower is as good a service to a ship whether it is the only one using it or there are a thousand others. Webpages are another good example.

Large countries have an advantage here: It costs the same to build a lighttower whether you are the US or Lichtenstein.

The military might have been a bad example though...

I really like your point #1, and it's the most important. I'm not sure if there are empirical analyses to support this, but I believe that investing in education has the greatest returns (up to the limit when your whole population is educated maximally--but that's a far ways off from where we are right now). It lifts the whole economy up on its own, and makes it more competitive in the world, which is very important re: Greenspun's comment about today's globalized world being very different compared to the 1930s.

As for the rest... those are nice to haves, but I think that lowering taxes to encourage foreign investment is an asinine comment. There will be low investment in the next few years, as he comments, if there is a poor political and economic environment for it, not if there are unfavorable tax conditions. Investors are sitting on mountains of cash right now; if the government creates policies and programs that incentivize people to put that cash to work (i.e. government/private sector co-sponsored infrastructure projects) then they will.

Most people don't get this point, but the US spends A LOT of money on education, more than most countries. "More money" is the easy answer, the one that politicians like to use. But I don't think the returns of spending more federal money on the current educational system are positive.

Here is a chart comparing US education spending with the performance of its students on international math tests. I don't think you can look at stats like this and say "more money" is the answer.

http://www.heritage.org/Research/features/issues/charts/Ed_K...

There are fundamental incentive problems with public monopolies. When you have a group of dedicated, wealthy, involved parents, these negative incentives can be overcome. However, the system fails your average person, and it surely fails those who need the most help even when a lot of money is spent on them.

Those of us who advocate market reforms simply want the incentives of the system to be a help, rather than a hindrance. But we're radical right-wing nazis who hate children and eat puppies, so I don't think our plans are going to be implemented any time soon.

Also, it's funny that we are characterized that way in the United States, when such right-wing countries as Sweden and the Netherlands already have universal school vouchers that can be spent on private schools.

The fact that DC's money is misspent does not automatically mean that the problem isn't money. And sure, one good way to raise money for the DC school system would be to streamline their administration.

It is easier to look at a particular district and point out what they are doing wrong (cronyism, graft, etc.) than to build universal policy that improves the system as a whole. "There are a thousand people cutting branches for every one striking at the root", and all that.

I'm not engaging with the rest of your argument.

That would be my main argument. Then I wandered a bit.

For the time being, I just think about the fact that teachers in these supposedly-overfunded school districts are teaching overcrowded classes in doublewide trailers and spending their own money on books and classroom supplies. And then I think your argument is awfully abstract, counterintuitive, and unpersuasive.

Part of having a free market in labor (such as we have) means that, if you're trying to attract people to take on a particular position, you need to offer enough to lure them away from their other options.

Public school teachers have good job security and benefits (after awhile), but the starting salary is usually very uncompetitive with most skilled private sector work and it takes a long time to obtain enough seniority to catch up.

For a lot of folks who might make good teachers, switching to teaching in public school is asking them to take a paycut in the 50-100k+ range.

If you don't have starting salaries for teachers in the 60-90k range you lose a lot of people to law school, medicine, technical fields, grad school, finance, and even other public sector work like police and fire and so on.

So rather than asking "is school underfunded or overfunded?", a better starting point is:

(A) what would it cost to get the people we'd want to be teachers doing the job at a level we'd be happy with? We don't have to resort to guesswork and rhetoric here: think of people you know, and figure out what the pay would have to be to get them to take up teaching instead. That's your answer.

(B) Once you've figured out what it'd cost, then you can start figuring out "is it worth it?" Most people jump in with a particular agenda to push and never do the gut check "would anyone I know who's capable of being a good teacher work for 45k starting?".

There's certainly a lot of bureaucratic overhead that could be reduced, if the political-economic cost of reducing it was outweighed by the benefits of doing so; that's another fact-based question you could derive answers to with some real legwork.

If anything, though, the above highlights one of the less-discussed issues with "rising income inequality": as the best "attainable" private sector outcomes become increasingly more attractive than the best public sector outcomes, you either have to spend a ton of money to get anyone to take a public sector job or you have to settle for only incompetents and failures going for public sector work; witness also, eg, the SEC or FDA.

There's more to it than money. Public school teaching is currently a lousy job for a number of reasons:

* very large amounts of work to take home

* having to deal with complaints from parents and administrators if you raise the rigor of your classes

* if you're male, the possibility of losing your career if a female student decides to lie and say you did something wrong

* the monotony of only a small portion of your work being actually academic-related. Most of the work is babysitting-style work or else administrative work. For people who like to work with their minds, this is a big deal and a reason against going into teaching.

Also, I don't know where you're getting your numbers from. Who (non-teachers) is making these enormous salaries you quote? Those are big numbers.

My basic assumption is that there's a minimal amount of smarts you'd need to have to be capable of being an effective teacher.

I then looked @ people I know who I think have at least that minimal amount of smarts, took their job titles, than was going off of the local salaries for those kinds of jobs.

My mistake was comparing local salaries for those kinds of jobs to the nationwide median for k-12 teachers; since "local" for me means "expensive eastern seaboard city", I'm comparing expensive apples to median oranges, and thus I'm a bit off.

For reference:

http://www.payscale.com/research/US/All_K-12_Teachers/Salary...

That said, I do think people's expectations are off for how much teachers "ought" to be getting paid.

We can probably agree that there's some N for which "you probably have to have been in -- or have been capable of being in -- the top N% of your high school class to be capable of being a good teacher".

We might not agree on that N -- 5%? 15%? 25%? -- but let's look at what each N means if do a naive mapping to individual income levels:

top 5% -> 100k+ top 10% -> ~75k+ top 15% -> ~62.5k+ (I'm ballparking this from the table)

etc., via http://en.wikipedia.org/wiki/Personal_income_in_the_United_S...

So pick your top N% and pick a salary range and you've got a ballpark range for what it'd take to staff a school with teachers culled from the top N% of achievers (and note that I'm actually lowballing it: the $ for each N is the minimum amount to put you into the top-N%, not the average or median income of the top N% of earners).

I'll happily admit that the above is a horribly inaccurate ballpark, but it's a place to start from instead of handwaving as to why teachers are/are not paid that much.

As a side note: one of the things that isn't mentioned when looking @ how much school costs in, say, South Korea is that relative salaries are usually higher for teachers than their domestic counterparts, and on top of that due to cultural reasons they're more "respected" by their fellow adults than they are in the USA, which makes it cheaper to attract quality people to be teachers.

That criterion has the same problem with education as it does with charitable organizations: it decouples money spent from results achieved. Maybe the answer to more effective schools and charitable organizations is better administrators who can only be recruited with competitive salaries. If that's the case, using that criterion would force schools and charitable organizations to hire less capable administrators in order to get enough funding.

Edit: just to clarify I didn't want to come across as calling you a right-wing Nazi baby killer and hope that I didn't in the original post.

Just to clarify, I wasn't saying that you did. I was just commenting on my frustration with the general state of public debate in the United States. People who support market-based policies are generally vilified right now. I think it is just a hangover from the Bush presidency, since he is widely disliked and supports market policy in his speeches. Debate will probably become more reasonable when he is gone.

I'd go further and say you don't even need the wealth -- just dedicated and involved parents. Success will flow from that. Trouble is, it's a vicious cycle: the kids who need the most help often have the least dedicated and involved parents.

People claim that private schools are better than public for all sorts of reasons, but I think the main reason probably is that the parents who care enough to put their kids in private school usually also care enough to be dedicated to and involved in their child's education.

So what is it? I wonder if it's a cultural thing. I remember how important it was during high school to not be seen as a "nerd". In Italy, my friends can't really relate to that sort of mentality - it doesn't really exist there like it does in the US. Doing well in school is basically seen as a good thing. Maybe it's not foremost in everyone's minds, but it's not something to be derided either.

The empirical analysis is all decidedly negative. The U.S. dramatically increased education spending in the past thirty years with nothing to show for it. On a local level, pretty much every study of increased school funding has shown no impact. From my experience, formal schooling has very little value add on top of what kids learn from their parents, on their own, and on the job.

Citations to the studies, please?