Thresholds

Obama’s Budget Would Push U.S. into Socialism

Developed by Friedrich Hayek, the Socialist Threshold—or “Tipping Point” as it is commonly called—states that an economy abandons capitalism and becomes socialist when spending exceeds exactly 23% of the economy.1

This was the best April Fool I came across yesterday. It got me for a moment, though I had to read the note:

The Hayek Tipping Point was brought into some question in 1983 when, under President Ronald Reagan, spending reached 23.5% of GDP. Most economists agreed, however, that Reagan’s dedication to free market rhetoric and avuncular humor inoculated the U.S. from backsliding irrevocably into socialism.

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