Monday, December 05, 2011

Is Bigger and Bigger and Bigger Government The Solution?

China is demonstrating that big government can partner with the private sector to foster dynamic economic growth.  But can government become too big and tip the balance?

In 1870, all government spending was 7.3 percent of national income in the United States, 9.4 percent in Britain, 10 percent in Germany and 12.6 percent in France. By 2007, the figures were 36.6 percent for the United States, 44.6 percent for Britain, 43.9 percent for Germany and 52.6 percent for France.

As deficits or taxes rise, the risk is that economic instability will increase, growth will decline, or both. Paying promised benefits becomes harder. Or austerity becomes unavoidable. The paradox is that the welfare state, designed to improve security and dampen social conflict, now looms as an engine for insecurity, conflict and disappointment. (Wash Post, 12/5/2011)

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