The government share of the economy and the tipping point

James V. DeLong
Hard as it may be to credit, Steve McCann's fine How the Financial Collapse Would Happen in an Obama Second Term is overly optimistic. Steve puts US government spending at all levels as over 40% of our GDP, slated soon to go up to 46%. This is correct, but it ignores the costs of the regulatory and legal systems. As government budgets have come under pressure, various special interests have learned that capturing these systems can be even more effective than capturing a Congressional budget subcommittee. The environmental movement is particularly adept at this, forcing the private sector to spend billions of dollars on environmental protections of limited utility. The movement also prevents any economic use of huge swathes of land, timber, coal, oil, and other minerals, which is much cheaper (for the government) than buying land and making it into a park. But other interests are close behind the enviros, in a long parade of unions, feminists, disability claimants, racialists, the...(Read Full Post)

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