Do Wealthy Countries Need Big Government

Noah Smith in Bloomberg argues that the claim among conservatives that big government is bad “only holds locally. If you do an empirical study and you find that more government bureaucracy is bad for the economy, what you’ve found isn’t that this is true in general — only that it’s true at one particular moment in time.”

“Look at how U.S. total government spending has grown as the country has become richer and richer:”

gov't share chart

Are we supposed to believe that rich countries are rich in spite of the fact that they all have big governments? Should we believe that government is a parasite that always, without fail, finds a host in the body politic of every single country that reaches first-world status?

“Or should we conclude that big government is a necessary ingredient for countries to get rich?”

“According to MIT economist Daron Acemoglu — who is one of the most respected economists in the business, and who specializes in development and growth economics – it’s weak states, not overbearing ones, that hold back growth in much of the developing world.”

“In other words, big government is good — up to a point. And people know that big government is good, so they allow it. This is what Acemoglu calls a ‘consensually strong state.’”

 

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