You seem to want law and order and that is mainly a local job, infrastrucure and I suppose you mean the roads and bridges and such. Here too this should be a local matter. National defense is a good thing, but itself does not warrant major tax bills or major government structures.

• By "local" do you mean municipal? All levels of government are involved in implementing government regulations and providing public goods and services; the national or federal level only ensures that such policies are applied uniformly throughout the state in question.
• National defense only applies to people who have a national identity, are nationalistic, and therefore communitarian to some degree. If everything is "mainly a local job," then nations are non-existent and national defense is unnecessary.

Government does not need to be in the schools mandating what gets taught, it should not be in the income redistributions (AKA vote buying with YOUR TAX MONEY).

• It used to be that the private sector mandated what was taught, namely the literacy needed for business administration. Should our children only be educated in job skills?

They need to get out of a persons business with his own property. The government has far too much control of peoples' private property and has far too many laws and regulatios that it only selectively enforces.

• Please provide examples and define what is "too much control" and what is sacrifice necessary to gain the benefits of government, namely law and order, defense, and infrastructure.

Take immigration for example...the government does nothing about the problem.

• If there are no nation-states (following your anarcho-capitalist comments), then there can be no "immigration." What is wrong with everyone being a 'citizen of the world' with freedom of movement, as an American citizen has within the United States?

The EU is a construct of Germany and one wonders if Germany is now doing what it could not do during WW2. WE have a similar move going on here in North America and it will meet with very strong resistance.

• National Socialism had distinct ethno-racial policies, none of which are evident in Brussels. Such comparisons are shortcuts to thinking.

@ Kapitein A

1) This has nothing to do with "imperialism, military conquest, military power, exploitation of foreign lands".  Simply look at the facts.  Singapore has grown very fast for 2 generations because it pursued sensible macro-economic policies and with openness to foreign trade.  Chile has done the same, in a different setting, after the fall of Allende.   Their per capita income has grown rapidly.  Cuba and Burma (in similar neighborhoods) have done the opposite, they have chosen autharchy and nonmarket allocation methods. They are both still extremely poor.  The examples are everywhere to see.  This has absolutely nothing to do with ideological claptrap about "military power, exploitation, etc...", and other nonsense from naive-left journalists brainwashed in social science faculties.

2)  The evidence is clear that "democracy" is not a prerequisite for rapid income growth  in the early stages of development.   Some of the fastest growers in the past half century were under authoritarian governments, especially in East Asia.  The big question is whether this can continue as these economies mature into 'services-based' economies in higher stages of development.  I bet that it cannot continue for long and that sustainable development will also require political openness.  But the jury is still somewhat out on that one.

@ Kapitein A

1) Your concept of "fiscal policy" seems too broad, and would cause terminological confusion.  Fiscal policy is normally limited to policies with regard to government spending and government revenue measures, and perhaps also including deficit financing (or surplus investment) measures.  "Deregulation and privatization" are not part of fiscal policy, but are often part of a "neoliberal policy" package. 

2) Theories are explanations of certain 'realities'.  They will always be limited and incomplete, and not cover ALL contingencies and circumstances.  Their predictive power will depend directly on the 'quality' of their underlying assumptions.   I agree that one should certainly not ignore socio-political complexities, nor group-decision making, in formulating practical advice.  In principle, one should always take a pragmatic - as opposed to a dogmatic - approach when formulating policy advice.  But neither should one discount what economic theory (based on deductive reasoning as well as empirical observation) can teach, particularly in helping to formulate appropriate policy goals (or the 'direction' to go, if you will).  I have no dogmatic position on free trade, but the logic of the theory of comparative advantage is compelling, and the empirical evidence (both in crosss-section studies and over-time studies) supporting it is overwhelming.  

3)  What has the misleading concept of "level playing field" got to do with all of this?  There is little doubt that the Financial Times today is no longer what it used to be, both in its political opinions and in some of its economic views.  They have indeed become deeply infected by 'woolly' (even ideological) thinking in recent years.  Why should the level playing field be different for Korea, Taiwan, Zimbabwe, Peru, etc...?  They all are were they are, and (like everyone else) have to start from there.  As the article points out, the recent growth experience has been very different in different parts of the world.  East Asia in particular has made tremendous strides in recent decades, perhaps the fastest of anywhere in human history.  What has this got to do with the "West"?  Only ridiculous journalists infested with naive-left perverse western selfhatred could write such things.  The great advantage of the 'latecomers' in the economic development stakes, is that they have ready (almost immediate) access to technical and general knowledge which was not available to the 'trailblazers' (largely but not solely the West) .  All the development costs for that technology and knowledge were incurred, often over very long periods, by the trailblazers.  However, if the latecomers want to be able to take advantage of this 'great advantage (of being the latecomers) they have to pursue sensible macroeconomic policies (and maintain minimum political order) and to attract the necessary foreign capital.   

4) I already stated that the costs of protection tend to be larger for small countries than for large ones.  The latter can often better 'afford' to "pursue an isololationist path".  But, in general they would all do better if they expose their economies to competitive pressures from the rest of the world.    You mentioned New Zealand. That is a perfect example to illustrate the benefits of openness and the cost of the 'isolation' path.  NZ is very comparable (in a cultural and political sense) to small west-european countries, like say the Benelux countries.  At the end of WW2, NZ (and Australia) were much richer than western Europe.  For about three decades they pursued very socialistic economic policies (under dominance of strong trade unions) with high levels of protectionism. Meanwhile, in western Europe , markets were being 'opened' up under the pressure of the EFTA and EEC process. By 1980's, the results were very clear: the formerly richer countries 'down under' had fallen substantially behind their European counterparts in per capita income (perhaps up to a third).  Since then, the situation is reversed.  NZ has radically 'opened up' its economy to external competition during the 1980's, the power of the unions has been constrained, and its per capita income on the whole has been growing faster again than in the Benelux.    

The solution is equally as simple. Majorly cut taxes, majorly cut government and the associated red tape. Less government, a simple solution.

• I'm afraid that your nightwatchman state does not appeal to the vast majority of Europeans, mainly because they tend to be more communitarian culturally than say the United States.

From the BBC website:
"The EU already has rights to legislate over external trade and customs policy, the internal market, the monetary policy of countries in the eurozone, agriculture and fisheries and many areas of domestic law including the environment and health and safety at work. "

• If European Union members want the benefits of co-operation then they have to make sacrifices for them.

The only rights the EU guarantees is its own future. It will build a bigger government that is not only unable to function but will stifle any competition or creativeness that it does not approve of. The rules will be made according to whim and the regulations will be selectively enforced.

• This is your opinion; provide evidence if you want it to be regarded as fact, especially the last point.

Government is the problem, more government now matter how benevolent is not the answer.

• If you want to live without law and order, infrastructure, and national defense then government is the problem; if you want to go on a tax-free ride at the State's expense, than you can, to quote Sean Penn, "f*ck off and go join Al-Qaeda."

Nor can history be discounted. All of the countries which comprise the West have pursued imperialist policies, namely military conquest and economic exploitation of foreign lands; in some cases, both continue, even if more covert. Therefore, some portion of the West's economic standing is derived from the projection of military power abroad.

Economic liberalization must be accompanied by democracy and the rule of law; until the latter two prerequisites are met, it will be some time before East-Central Europe will be able to forget the good old days of 'goulash Communism.'

Essentially, what is good for one country or group of countries is not necessarily good for all. Nor does it appear, despite the shocks of deindustrialization, that the West is starting out on a level playing field with the rest of the world. Indeed, it does not stand to reason that the West with its "view from the top," to quote the Financial Times, and with a competitive conflict of interest, could prescribe what is best for the world's national economies.

I largely agree with your points, however, any differences of opinion are difficult to elaborate upon given this board's obvious logistical constraints. By liberal "fiscal" policy, I am referring to domestic economic policy, namely degregulation, privatization, and various tax incentives which are as much a part of neoliberal policy as free trade is.

The problem with economic theory is that it: (a) assumes people and groups (e.g. states) are rational i.e. welfare maximizing; (b) rests upon conclusions derived from simplistic premises; and (b) ignores socio-political complexities that affect individual and group decision-making.

Certainly, comparative advantage works in theory, however, in practice it works for some and not for others. F.e. the United States is relatively self-sufficient and could pursue an isolationist path in a way that peripheral economies like Canada, Australia, and New Zealand could not.

@ longun45

Aren't you generalising too much?

Governments certainly can raise barriers to economic growth, and they often do that in great excess.  But, at the same time, they also can remove barriers to economic growth, and on top of that they have a limited but necesssary role to perform.  

I doubt that "Europe is doomed" from an economic perspective.  First of all, Europe is very diverse, and some parts are doing pretty well economically, and others are not doing so well. 

Secondly, the process of European trade integration has been a tremendous boost for economic growth over the past half century.  But that is largely in the past.  At the same time, however, it is probably true that many aspects of the recent focus on 'harmonisation' (instead of liberalisation) within Europe could be detrimental for growth in the future.  The key is the maintenance of a democratic system, with absolute maintenance of freedom of opinion or expression because that will guarantee that countervailing forces can get organised to tackle the most eggregious problems created by government or by others.  In that respect, you have a valid point, i.e. that the democratic deficit at the EU level is a serious problem.  As long as that cannot be fixed it would be dangerous to centralise more competencies at the EU  level.

Governement is not per se the problem.  It is the nature of a specific government that could be the problem.       

@ Kapitein A

I think that you are expressing some version of the so-called "infant industry argument" for protection, for which there is some respectible theoretical support.  The theoretical case for free trade rests on the theory of comparative advantage (or comparative costs).  The infant industry argument says that the concept of "comparative advantage" should be viewed in a dynamic sense, not in a static sense.  In other words, a particular country may not have a comparative advantage in certain production activities today, but it might acquire comparative advantage (CA) in them after a learning proces.  Hence, this can be an argument for TEMPORARY protection in certain cases, so that the CA can be acquired through a learning process.  However, this requires 'saintly' politicians, because once the protection has been granted, 'special interests' have been created, and in practice it may then later never be possible to remove the 'temporary' protection, even if the protected industry would never acquire a genuine CA.  In that case, the country would remain stuck with 'uncompetitive (inefficient) industries' in case the learning proces never leads to CA.   This is in fact what has happened in numerous cases.

Of course, historically, there have been countries which have developed behind strong 'protective' walls, and others which have done so without strong protective walls.  I do not think that this is a matter of time period, i.e. whether a country is already well developed ("strong" you call it) or not.   Many factors come in play when it comes to development.  For instance, it would not be surprising that cultural features of 'judicial certainty' (or rule of law) and disciplined behavior could far outway the impact of 'external trade' policy on economic development and growth.  Moreover, economic liberalization can mean many different things and is certainly not limited to foreign trade policy.  Domestic 'liberalisation' (in the sense of promoting competition versus fostering monopolies and oligopolies) could be more important in large countries than foreign trade liberalisation.   Generally, though, the smaller an economy is, the larger the costs from external trade protection will be (proportionally speaking).   

Your Canadian example does not prove the point you claim to make.  It simply says that certain Canadian industries have historically developed behind a protective wall.  It cannot say anthing about what would have happened without that protective wall.  It is quite possible (but uncertain) that Canadian income or GDP would have been higher today without that protection in the past, but what is certain is that the production structure of Canada would be somewhat different from what it is today.  Because protection creates 'artifcial' incentives for some activities, i.e. it subsidises certain activities, a cost which will have to be borne by the rest of the economy (which means that the protection indirectly will penalise other activities).

The problem with generalisations about a specific 'liberalisation' is that many other factors are always at play, so that one cannot easily statistically separate the specific effect from liberalisation from the total effect of all relevant factors.   But there is little doubt, i.e. there is massive empirical evidence, that among broadly 'similar' countries, the ones that pursued open trade policies have done much better (in terms of growth in per capita income) than those that have shielded big parts of their economy from international competition.  

In short, you do not make a generally valid argument for protectionism.  But you have made a historical point about what actually happened in a specific case of Canada.  

P.S.  It is clear what you mean by liberal "trade" policy, but it is not clear what you mean by liberal "fiscal" policy.   

To foster economic growth the governments need to remove the barriers placed there by the governments.  Many governments will not do this simple thing.  They fear loss of control.  Europe is doomed, as they now have an unelected government running the region.

Government is the problem. More government = more economic stagnation.

Liberal fiscal reform applies more to countries which already possess strong economies; weak national economies tend to need time to develop under the protection and support of the state f.e. while Canadian businesses are in favour of liberal trade and fiscal policies (e.g. the FTA, NAFTA, WTO, etc.) today, during the 19th Century they were clamouring for protectionism e.g. the railways.