Big government = slower growth
This doesn't come as a surprise to yours truly. Although, with our manufacturing sector [and old staple industries] on life support, you would think that if the current Liberal government ever wanted to reach a point where our province can stand on its own two feet, they would realize that a growing bureaucracy (and intervention into the private sector) only serves as an impediment to overall economic efficiency, not to mention, it retards growth.
In other words, the bottom line here is that the higher the level of public spending in a given country or province, the lower its growth rate tends to be. Which makes me wonder about the title of the Telegraph article "Progressive intent", in that, is it progressive to keep people in acute poverty and tax them to death while government over-centralizes and bloats? You know what my answer to that would be.
Anyway, for more on this, go check out this study by professor Robert Lawson of Capital University in Ohio who has done excellent work on this topic wherein he gives us reason to believe that there truly is a negative correlation between these two factors. Hat tip Dave Campbell.
3 Comments:
First, thats utterly false. It depends what KIND of 'growth'. Typically when looking at growth they tend to look only at private growth. For example, look how much more money goes toward health-is that 'slower growth'? Not at all.
The period when this country had the fastest growth was right after the war. During the war there was 'industrial growth' (which also continued after the war), but no growth in social spending.
So the caption really makes no sense. Growth in the economy was highest when government was HUGE. So thats patently false.
Of course as we know growth is not unlimited. We could argue the same about Microsoft, it is 'big', in fact far bigger than most governments-is its growth thereby slow?
In NB we see growth is extremely high in the private sector-mainly Irving.
But this has nothing to do with that. A social department to 'get more active' with social problems certainly doesn't push the private sector out of the way-there is no market.
Of course there is the simple silliness of making departmental changes in order to have some new programs is completely ridiculous, a department can change its mandate and add new services.
I would be very surprised if some foreign investor said "look, they've changed a department around, we certainly don't want anything to do with them'.
Yeah, New Brunswick can do with less taxes but with the government we have, we need to keep giving large amounts of our earnings to the government to even function.
The government needs to learn to do things better at a lower cost.
Mikel: I'm not suggesting that we impose a fiscal straightjacket on social policy. What I am suggesting (and I said this about Boudreau's rainy day policy) is that the "Keynesian economics" of the 70s which spread widely in the western society after World War Two assumed a virtuous cycle in which public spending would stimulate the economy, leading to higher taxes, more revenue and eventually, in turn, leading to even more generous social spending.
What I am proposing is a provincial government which would live within its means...cut useless spending, reduce taxes to spurn growth and make government more lean and mean.
At the moment, we have an uncaring government (taxing low and middle income earners high) which wants to pick winners and losers in all facets of our society. That not only stifles ecnomic growth, it also sets a roadblock in between citizens and tru freedom as their money and their rights become simple "ponds" to government.
Anon: we don't have to, the government has chosen so.
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