Just saw Passion of the Christ

[Buff]

Originally posted by Colin@Mar 23 2004, 07:48 AM
What I mean is ...

If the 90's weren't good, what periods were? When was the last time government shrunk in proportion to the total size of the economy, GDP rose at a good clip, the deficit was substantially reduced, inflation was very low and unemployment reached extremely low numbers?

I'd say the late 1960's were pretty good. The late 1990s trump anything in between.

Joint Economic Committee Study April 1998 (http://www.house.gov/jec/growth/function/f...ction.htm#title)

This paper shows that excessively large government has reduced economic growth. These findings present a compelling case that rather than devising new programs to spend any surplus that may emerge from the current economic expansion, Congress should develop a long-range strategy to reduce the size of government so we will be able to achieve a more rapid rate of economic growth in the future.

The expansion of the U.S. economy has now moved into its eighth year and it has been 15 years since there has been a major recession. Despite this positive performance, the growth of real GDP in the 1990s is less than half the rate achieved during the 1960s. In fact, the average growth rate of real GDP has fallen during each of the last three decades. The economies of other developed nations have followed this same pattern of more stability, but less rapid growth.

Government provision of both (a) a legal and physical infrastructure for the operation of a market economy and ( a limited set of public goods can provide a framework conducive for economic growth. However, as governments move beyond these core functions, they will adversely affect economic growth because of (a) the disincentive effects of higher taxes, ( diminishing returns as governments undertake activities for which they are ill-suited, and © an interference with the wealth creation process, because governments are not as good as markets at adjusting to changing circumstances and finding innovative new ways of increasing the value of resources.

In the United States, government expenditures as a share of GDP have grown during the last several decades. At the same time, the investment rate has declined and the growth rates of both productivity and real GDP have fallen. An empirical analysis of the data from 23 OECD countries shows a strong negative relationship between both (a) the size of government and GDP growth and ( increases in government expenditures and GDP growth. A 10 percentage point increase in government expenditures as a share of GDP is associated with approximately a one percentage point decline in the growth rate of real GDP.

An analysis of a larger data set of 60 countries reinforces the conclusions reached by analyzing OECD countries. After adjustment for cross-country differences in the security of property rights, inflation, education, and investment, higher levels of government spending as a percentage of GDP exert a strong negative impact on GDP growth.

The five fastest-growing economies in the world from 1980 to 1995 had total government expenditures as a percentage of GDP averaging 20.1 percent, which is less than half the average of OECD countries.

If government expenditures as a share of GDP in the United States had remained at their 1960 level, real GDP in 1996 would have been $9.16 trillion instead of $7.64 trillion, and the average income for a family of four would have been $23,440 higher!

The OECD countries currently spend 15 percent of GDP or less on the core functions of government-protection of persons and property, national defense, education, monetary stability, and physical infrastructure. When governments move beyond these core functions, the empirical evidence indicates that they retard economic growth. The reduction in GDP growth rates in the United States and in many nations around the world can be traced directly to their increases in government expenditures far in excess of the growth-maximizing level.








The Size and Functions of Government
And Economic Growth
From the standpoint of economic stability, the U.S. economy has performed very well in recent years. The current expansion is now into its eighth year, and the economy continues to grow. It has been 15 years since the United States has experienced a serious recession. This is the good news. But there is also another story that has been largely ignored: The real growth rate of the United States has persistently declined during the last three decades. Even with the expansion of the 1990s, the average growth rate during the current decade is less than half that of the 1960s, and only about two-thirds of the figure achieved during the instability of the 1970s. The experience of other developed nations has been similar -- their economies have been expanding, but at much slower rates than was previously the case.

The sluggish growth of developed economies is particularly surprising in light of another trend. Following the collapse of central planning and fall of the Berlin Wall, economic liberalism has become much more acceptable. In recent years, the world has moved toward greater economic freedom in several areas. Many countries have reduced their tariff rates, liberalized (or eliminated) interest rate and exchange rate controls, lowered their top marginal tax rates, and followed monetary policies more consistent with price stability.1 Economic theory indicates and a number of studies have shown that these moves toward economic freedom have promoted economic growth.2

Despite these encouraging trends, however, one major component of economic freedom -- size of government expenditures -- has generally been moving in the opposite direction. In recent decades, there has been substantial growth in the size of government as a share of the economy, particularly in high-income industrial nations. This study examines this expansion in the size of government and its impact on economic growth.3

And so forth. It's all there and elsewhere.

Anyway, debts must be paid or forgiven, and either case will be cause enough for economic collapse when the bill comes due.



Last edited by Buff at Mar 23 2004, 08:06 AM