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This project attempts to provide some perspective as to how socialistic countries are, in a sincere and honest manner. The idea came from a method that the CIA (US Central Intelligence Agency) uses to measure the "degree" of socialism in a country.

THE CIA INDEX

The CIA uses the following index: Government Expenditures / GDP x 100 = Socialist Index.

The idea is that the more a government spends in relation to all the goods and services that are generated in the country, the more socialistic it is. To a degree it makes sense, because in classic socialistic or communist countries, most or all of the means of production are in government hands. This means that the GDP is actually a reflection of government production. As in a socialistic or communist countries most or all products should be developed for the people, an ideal communist country should spend the entire GDP, hence returning everything to the people.

OUR INDEX

Liars and cheaters

The problem we have with the CIA Index is that it is not honest. The GDP is not a good measure of what's really going on. Consider this.

Any Political Theory states that politicians are implementing said theory for the "good" of the people (in whatever way they may choose to define "good"). However, the underlying implication is that this political system is actually economically sustainable. A political system cannot by any definition provide any "good" if it is not economically viable. This means that the degree to which a country embraces socialism must be correlated to its economic viability.

The problem is that if a country borrows and spends, it can sustain any political theory whatsoever no matter how ridiculous. All such theories will seem viable for as long as there is money to spend. The true level of socialism is to know how much of viable socialism is really being implemented.

For example, if Joe makes 2 million EUR per month, spends 3 million EUR per month and it also has a debt of 10 million EUR (and growing), it is obvious that his spending spree will soon come to an end. Is Joe an "honest" spender? Of course not! Joe is financing his spending through debt.

We always go back to the most basic economic rule: there is no free lunch. This applies to capitalists and communists (socialists) alike. Goods and services (real wealth) cannot be willed into existence from thin air as fiat money is. They are real.

The correction

In order to measure viable or efficient socialism in a country, we modified the CIA Index as:

Efficient Socialist Scale Type I = Government Expenditures / (GDP - Government Debt) x 100

The Efficient Socialist Scale Type I (ESSI) is therefore expressed as a percentage.

This scale is much more honest because it is telling us how much money the government is spending in relation to their net assets.

The following picture provides the color codes to understand the scale.

ESSI Color Codes

Green: this means that the government is spending not more than 25% of their net assets to support socialism. This low level of expenditure seems reasonable and more-or-less sustainable.

Yellow: this means that the government is spending between 25% and 50% of their net assets to support socialism. This low level of expenditure seems borderline. Typically countries begin to take significant debt when they reach the 50% level.

Pink: this means that the government is spending between 50% and 75% of their net assets to support socialism. This low level of expenditure is clearly marching into un-sustainable territory.

Red: this means that the government is spending over 100% of their net assets to support socialism. This low level of expenditure is clearly un-sustainable territory.

Dark Blue: this means that the country has passed the Default Point and whatever its government may do it is un-sustainable. This includes any social spending they may do. Basically, everything is being financed with debt. The more negative the number, the larger is the expenditure financed by debt.

The Table

This is the table of countries sorted by ESSI calculated for 2013. The first column contains the name of the country and the second column contains the ESSI. All data was obtained from the International Monetary Fund. Take a look at yours.

ESSI Sorted By Rank

One of the most surprising results of even such a simple calculation, is that the USA (-842%) is the first most socialistically dis-honest country in the world (followed by Belgium and France)! The US has massive amounts of expenditures but worse than that, they are financing all those expenditures with debt! Our data thus indicates that the US is a heavily socialist country which is artificially sustaining such socialism.

Compare this number with China, the largest communist country in the world: 32%. This means that Chinese communism is borderline sustainable and more honest.

And who is the least socialistic (and honest) country in the world? Who is the beacon of the free market with an ESSI score of only 17% ? Iran!

This means that the "leader" of the "free markets" (US) is the most socialistic country in the world and that one of the countries belonging to the "Axis of evil" is the most pro-capitalist country in the world!

That should put things into perspective. Not everything is what it looks like; politicians are lying, what a surprise!

The other table

For your convenience, we have also included a table with the data sorted by country name.

ESSI Soryed by Name

The scale

There is one more thing that we did. Using the ESSI data, we created a histogram which shows just how far from the norm certain countries are; this provides a whole new perspective to the many political lies and games that politicians play. Please see below.

ESSI Distribution

Final Notes

Also, if you want the entire table, including all the years for which the IMF had data, please download the attached Excel or PDF files.

Have fun with the data!

 

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