Tuesday, October 28, 2008

Misery Indexes Across the Globe

Arthur Okun’s Misery Index (the unemployment rate and the inflation rate, added together) remains one of the best “economic snapshots” for measuring how an economy is doing.

Looking at Misery Indexes across the globe, there are quite a few surprises. For instance, America’s most recent full year (2007) Misery Index (7.5) was significantly LOWER than two of Europe’s more Keynesian “paradises,” Sweden and France!

For 2007 Sweden’s Misery Index was 8.3 (with an unemployment rate of 6.1% and an inflation rate of 2.2%) and France’s was 9.4 with an estimated unemployment rate of 7.9% and an inflation rate of 1.5%

For the same year, the United States; Misery Index was 7.5 with a 4.6% unemployment rate and a 2.9% inflation rate.

Moreover, individual nation’s Misery Indexes can tell us a lot about how well certain kinds of economies perform.

For instance, Hong Kong, long regarded as one of the closest economies to a free market (though it remains a lightly regulated market-based economy) had a 6.0 Misery Index with an estimated 4% unemployment rate and 2% inflation rate!

By comparison, Venezuela (one of the nation’s closest to being truly socialist) had a Misery Index of 27.2, with an 8.5% unemployment rate and an astounding 18.7% inflation rate.

Liberals in the United States support more Keynesian policies and we’ve embarked on a return to the Keynesian policies we had in the 1970s, since the 2007 Pelosi-Reid takeover of Congress. The current Democratic nominee (Barack Obama) promises even MORE.

Conservatives (both Democrat and Republican) support more Supply Side policies, the kind most evident today in Hong Kong, while far-Left Liberals who’ve long lauded Sweden and France, though increasingly less so, as those nations have moved away from some of their most Left-wing policies, now often laud Venezuela, which is trying to move beyond mere Keynesian hyper-regulation, to outright socialism.

The simple question to ask is, “Which country would you rather live in, Hong Kong, with its relatively tiny Misery Index of 6.0 OR Venezuela, with its staggering 27.2?”

This year, choosing your Party in America, may go a long way toward choosing your Misery Index, as well.

Pictured above Hong Kong's Prime Minister Wen Jiabao and Venezuela's President Hugo Chavez

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