Ilana Mercer, August 21, 2002

Using data from the Congressional Budget Office, Jeff Tucker of the Mises Institute details the Bush administration’s orgiastic spending:

From October 2001 to March 2002, federal outlays were up by $60 billion over the same period the previous year. In this time period, the federal government … has somehow managed to burn through fully $1 trillion in wealth formerly owned by the private sector. As for revenue, it is down from last year by $44 billion, netting a deficit of $129 billion. All told, annual government spending is growing right now at an astonishing 8 percent rate.

In keeping with the trend, the president has doubled funding for homeland security to almost $38 billion, describing this profligacy as “money to train and equip firefighters, police officers and emergency medical personnel; money for the Coast Guard, to protect our ports and coasts; money to keep our water treatment plants and nuclear facilities safe.”

A multi-billion-dollar government job-creation program is never a good thing, especially during a recession. For one, government workers are covered by rigid, “prevailing wage” legislation. This precludes the necessary flexibility in wage structure, so essential during an economic downturn.

The kinds of jobs government has created in the realm of homeland security are well paid, irrespective of productivity. If not through the theft of taxation or borrowing, jobs for federal employees are financed by printing money. Government employees are the first in line for newly minted funny money. This means that government job creation schemes are causal factors in the inflation of the money supply and in the further dilution of privately-owned wealth

As is the reality with a government job, the money appropriated goes to support a large bureaucracy that will do little to secure person or property in a rational, effective manner. The only security in this is the job security availed to the public-sector worker.

An increase in the number of jobs for federal employees will invariably come at the cost of real, sustainable, consumer-driven jobs in the private sector. The government’s trick is that the private employment, which will never exist, cannot be counted.

In addition to being divorced from consumer-dictated needs, government employees have no incentives to heed market-dictated standards. There is neither demand nor tolerance in the real job market for security personnel who fondle the scar tissue on the mastectomy-ravaged chest of a (white) woman before they will allow her to board an airplane. There are no jobs outside government for goons who strip (white) old ladies down to their Depends before allowing them to use a service for which the women have paid.

Recession or no recession, the United States government’s expenditure, as a share of GDP, has been rising steadily over the decades. In a paper entitled “The Scope of Government and The Wealth of Nations,” economists James Gwartney, Randall Holcombe, and Robert Lawson demonstrate that, on average, Organization for Economic Co-operation and Development countries, the U.S. included, now spend 48 percent of GDP. “In 1960, government expenditures in this group averaged 27 percent of GDP.”

Reiterated in similar studies, the evidence goes to show that government growth as a share of GDP coincides with a decline in GDP growth. Governments in high-income developed economies have now been steadily accreting for decades. The decline in prosperity or in real growth rates in these nations has been concomitant: As government share of the GDP rises, so has GDP in the OECD nations been declining. “A 10 percent increase in government expenditure as a share of GDP results in a 1 percent point reduction in GDP growth.”

The plundering class’ momentum is intractable. Once the political parasites acquire confiscatory power, they seldom relinquish it and toil diligently to expand it. In only three cases among OECD and 60 other nations surveyed was there a decline in government growth during the last decade or so. Most notable has been the rapid growth Ireland underwent, commensurate with the curtailing of government expenditure in the 1987-96 period. New Zealand’s political class loosened the chokehold in 1996, with the result that substantial economic growth followed. “While shrinking government has been rare in the past few decades, evidence from places where government has shrunk is consistent with the hypothesis that larger government lowers economic growth.”

Even if government pelf and distribution schemes brought about plenty, they would still be immoral. Citizens, however, can be hostile to moral arguments, because theft by bureaucratic bandits is often to their immediate advantage. Where morals fail to impress, numbers come in handy. The negative relationship between the size of government and prosperity is sufficiently compelling to convince the average individual to stop panting for more bureaucracy.


August 21, 2002

CATEGORIES: Economy, Government, Inflation

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