Is Big Government Inevitable? Desirable? Necessary?

Let’s start with two basic facts:

• Governments in all thriving, prosperous countries tax/spend 25–50% of those countries’ GDP (averaging around 40%).

• Governments in non-prosperous countries — those that haven’t suffered a recent crash in the numerator/GDP — are all below that range.

There is not a single thriving, prosperous country that does not tax at these levels, or engage in massive quantities of redistribution. Not one.

For me, this raises the conundrum:

If policies eschewing such redistribution are so economically efficient — as claimed by libertarians/conservatives/Republicans/neoclassical economists — one would expect at least one country to have emerged that eschews those policies, and to see that country surge ahead of all the rest.

It hasn’t happened. Not once.

So it’s easy to jump to the post hoc ergo propter hoc conclusion:

Redistribution is necessary for a prosperous country to emerge and thrive. It is at least a necessary (though of course not necessarily sufficient) cause of that prosperity.

But of course you can argue the opposite causation:

Prosperity causes bigger government.

I see two possibilities there:

1. Government services are “normal goods” — as people get more prosperous, they want more of them. Giving people what they want is not a bad thing.

2. The growth of government is an emergent property of a prosperous economy, and is not actually an expression of, does not provide, what individuals want. It just happens because of the inherent dynamics of the system. (Dynamics that are easy to imagine but that I won’t describe here.)

#2 is, I think, the the argument that libertarians would make to explain the correlation between government size and prosperity.

I don’t know how to adjudicate in any definitive way between these two conclusions, or between [one of them] and the redistribution-“causes”-prosperity conclusion.

Given some correlation (necessary to even assert causation), the only way to convincingly demonstrate causation is to tell a coherent and convincing story about the process by which the causation happens. That’s what I did in my first Angry Bear post (well, you can judge for yourself how convincing it is).

Absent any definitive way to decide, for the time being I’m going to stick with the first-blush conclusion suggested by the correlation, and supported by my theories of causation:

Larger government and a significant dose of redistribution are necessary for a prosperous, modern country to emerge and thrive.

 Cross-posted at Angry Bear.







9 responses to “Is Big Government Inevitable? Desirable? Necessary?”

  1. Foppe Avatar

    The US is extremely prosperous (=has extremely high GDP), and has a huge (federal) govt. Yet it also has the highest income inequality of all western countries, and the median income hasn’t moved (except down, for men; up for women) in 30 years. Which measure of “prosperity” do you accept? The libs only look at the former, and assume the latter matters not a whit. But arguing against that is fairly hard, since they simply assume that distribution is irrelevant dogmatically, rather than seeing that as a position to which facts are relevant.

  2. r Avatar

    Are you sure that you are not mixing up which came first? Chicken or egg? Perhaps you need a prosperous economy to have a big government. That might explain why the two go together. Not because a big government led to a big economy?

  3. Asymptosis Avatar

    “Are you sure that you are not mixing up which came first? Chicken or egg? ”

    Isn’t that exactly the question I’m posing here?

  4. Ted K Avatar
    Ted K

    Didn’t you hear??? Newt Gingrich likes to bath in hot Freddie Mac pork grease, and Michele Bachmann gets farm subsidies for her “family” farm located in Wisconsin (I guess Wisconsin feels like home because she was born in Iowa and her constituency is in Minnesota, and she only feels “home” is where she needn’t answer to anyone for receiving government subsidies while making noises from her toothed-anus about the private market).

    It’s the latest Republican rage to make loud oink oink utterances at the knees of Uncle Sam. Definitely in fashion, but it’s like a double-headed dildo, you only show it the people you’re in bed with. Try to keep up with the current Republican trends would ye???

  5. Foppe Avatar

    dear lord you’re crude.

  6. Asymptosis Avatar


    Yeah but the dildo comment made me laugh out loud. Tells you something about how crude I am…

    Obligatory admonition: Ted, control yourself!

  7. Asymptosis Avatar


    re your first comment: mostly true, and apt. Except:

    “the median income hasn’t moved (except down, for men; up for women) in 30 years.”

    I think you mean median wage. Median household income has increased, but I think it can (mostly?) be attributed to women entering the workforce/the rise of double-earner households. It’s gone up because people work more. The rather profound productivity increase over that period hasn’t done anything (much?) for them.

  8. Foppe Avatar

    Ah, yes, apologies for the sloppiness.