How to Maintain a AAA Rating
Via Ellie Lang, the NYT (no link, unless this works) lists thirteen (13) countries that have a AAA credit rating from S&P:
- Switzerland
Hong Kong
Sweden
Germany
Canada
Denmark
Britain
Netherlands
Finland
Norway
Austria
France
Australia
The thing all thirteen have in common? All provide National Health Care.
I might suggest that while several have several major parties who compete for political supremacy, none have the kind of partisanship that this country has experienced in my lifetime, but I really do not know that much about the politics of any of the countries other than Canada and Britain. As long as the people we elect are more concerned about scoring political points than in doing what is best for the country–as opposed to the interest groups that fund them–we are going to be in a world of hurt.
At least Britain and the Netherlands have hybrid systems with private practitioners supplementing the public system. The Netherlands system is hard to even classify as national healthcare, it’s more like expanded medicare with insurance mandates (similar to the Massachusetts system with minimum credible insurance).
Hong Kong have a two tiered system. Very similar to US county hospital which is a catch all system. Then there is private practice. It is not a national health care system as in Great Britain or in Germany.
NOte interestingly the ten year bond yield fell today, to 2.36%. France is likley in trouble as its bond yields have spiked upwards with the european crisis.
Ken,
With the exception of Britain (and to a lessor extent France) all rely on the US for their national defense. Britain and France both are nuclear powers so have the ability to defend themselves, but have almost no ability to project forces outside their borders. The Libyan efforts are showing those weaknesses.
Basically, in general, they made the decision to forgo the ability to defend themsleves in return for a national health care system. The US picked up the burden.
I think we (US) made a bad choice about defending them.
Islam will change
Nice realization 😀
buff,
The defense excuse might have worked a while ago. (BTW… not for Hong Kong.) But who exactly do you think will be invading Australia, say, or Netherlands using the means for which the US defense establishment would be a deterrent. These days we waste a lot of money on “defense” that doesn’t defend very much.
Mike,
You are correct about Hong Kong. Its no longer soveriegn so it shouldn’t even be on the list. And yes we are still defending these people by inertia in some cases. But when they established their National Health Care systems it was done under the US defense umbrella.
As for the rest. Great, I would be happy if the US stated explicity that we were no longer going to defend those countries, leave the appropriate organizations (NATO for one), and remove our troops from those countries. There’s a big chunk of money being spent overseas that could be ended forthwith.
BUt then again the Dutch probably thought they were safe and managed to skip the bloodletting of the Great War in the 1920s also. Twenty years later they were under the boot and one of the last countries that the German Army left (after V-E day).
Anyone predict in 1985 that in 2005 we would have overrun Afghanistan AND Iraq and were sitting on them to the tune of a quarter a milion men? Building an effective military takes quite awhile.
Islam will change
They are also all countries that have a the letter ‘A’ or ‘S’ in them. These countries are all on the ‘west’ side of the Iron Curtain (in the day) or former British colonies.
This is another example of correlation with no causation. Which seems to be rather common around here.
🙂
Islam will change
Ken,
The S&P source for the Sovereigns ratings was provided on the AB Open Thread, 7 August.
Sure, you can ignore the S&P source data whether provided on AB or not, and post incorrect information like you did in this main post. That doesn’t make any sense as Angry Bear’s credibility is harmed.
I have no idea why you prefer to cite another source or another blog and the NYTimes for “facts” when the NYTimes failed to provide the complete list of AAA rated nations. It appears to me that AB readers will see your list and think that it must be accurate as you are an economist. Well, the truth is that the NYTimes list is wrong.
MG,
Ken is part of the ‘reality’ based people. You know, the ones who think Bush put on more debt in 8 years than Obama has in 2.5 (and got downgraded on top of that). Can’t let the facts impeded the narrative. Note how the wars have drigfted totally off the radar of the MSM. And has anyone mentioned we are STILL in the balkins…well over 10+ years after Clinton sent us there for a few months.
BUt they will all vote for Obama in the end…and he knows it.
Islam will change
Oooh!Oooh!
I know!
Corporation tax is lower in each of those countries!
I’ve not checked them all but I’m pretty sure I’m right…….
Ooooh! I know another one!
Dividend taxation is lower in all of them!
For all of them either tax dividends at the company level or at the level of the individual recipient. Only the US does both, taxing the dividends at the corporate level, as corporate profit, and then again as income.
This is a useage of the word effective that is wholly unfamiliar to me. Effective towards what goal pray tell?
maybe we should have done what italy did after they were downgraded:
Italy Raids S&P, Moody – Lost in the hubbub of Standard & Poor’s downgrading the US bond rating is news that the Italian government has the ratings agencies under criminal investigation. The Guardian:As stock and bond markets across the world tumbled on fears about Italy and Spain, it emerged that police acting on orders from prosecutors had raided the Milan offices of rating agencies Moody’s and Standard & Poor’s as part of continuing investigations into their role in the recent financial turmoil.[…] Carlo Maria Capistro – chief prosecutor of Trani, a small Adriatic port – told Reuters that his office was checking to see whether the rating agencies “respect regulations as they carry out their work”. The raids took place on Wednesday as Italy’s prime minister, Silvio Berlusconi, addressed parliament on the mounting crisis. He and other leading Italian politicians often cite speculation as a cause of market storms that involve a run on the country’s shares or bonds. And the media habitually depicts sell-offs as attacks on Italy.
Here’s the Standard & Poor’s Sovereign rating list:
Sovereign Ratings And Country T&C Assessments
S&P, August 5, 2011
S&P Sovereign Ratings And Country T&C Assessments
Legend:
1. Sovereign local currency ratings (LT/Outlook/ST)
2. Sovereign foreign currency ratings (LT/Outlook/ST)
3. Transfer and convertibility assessment
Nation 1 2 3
Australia AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
Austria AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
Canada AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
Denmark AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
Finland AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
France AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
Germany AAA/Stable/A-1+ AAA/Stable/A-1+ AAA
Guernsey […]
Ken,
I posted the actual S&P Sovereigns A list downthread.
Swiss system is mandatory insurance purchase with subsidies if premiums exceed 8% of income.
Pax:
Germany has a two tier public and supllementary system
Thanks Anne
The thing all thirteen have in common? All provide National Health Care.
So does
Argentina (S&P rating = B)
Venezuela (BB-)
Serbia (BB)
Uraguay (BB+)
Pakistan (B-)
Sri Lanka (BB-)
North Korea (NR)
Cuba (NR)
May I submit that National Health Care is not a determinant variable for sovereign debt rating?
Sammy submits…, and I answer, NO! You can’t ruin their fantasy.
Ignoring 60% of the budget which is growing (some say out of control), and demand additional revenues (without strings) to spend even more, and demand cuts in Defense while demanding more government ?stimulus? spending, is just a few of the irrationalities of that fantasy.
800+ days under democratic congressional control without a budget. Months after republicans take control of the House they pass a budget, and many of the associated appropriations, the democrats make even more hypocritical claims that they (the Dems) are the party of adults facing the true deficit/ budget issues.
It’s really hard to admit that after gaining the greatest ever fantasy (President, control of House and veto proof Senate) their life long policy goals actually suck. That the voters have rejected their preeminent entitlement (Govt provided healthcare for everyone) and will probably reject their party in the next elections.
That’s a reality check.
run, obviously you didn’t click on the link.
S&P doesn’t provide their list in this fashion. Anne would never spend the amount of time it takes to build this listing let alone the time it took to format it for this thread.
Hours of work…
Sammy,
I think that blew Ken’s implication about National Health care out of the water. Not even any correlation, let alone causation…
Islam will change
well, no. but I don’t think that was Ken’s point.
maybe his point was that you can have national health care and an AAA rating.
Well yes, he did. Ken’s implied point was countries with national Health Care get AAA ratings. Sammy clearly blew that out of the water showing no correlation and definitely no causation between having a AAA rating and National health Care.
Ken also missed the fact that the greatest economic powerhouse on the planet, the US, does not have either National Health Care nor a AAA rating.
Islam will change
Got any figures about those nations spending on health care, their health care outcomes, what fraction of health spending is from taxation, what their tax revenue and govt spending as pct gdp are?
Nice list Sammy. In terms of cost and quality I’m very positive that those countries will be in the top destinations for healthcare.
Reika Watusi
Plastic Surgery in Thailand