Why is it so? Government spending is inefficient but at the lower levels necessary. Government spending for law and order, defence, justice etc creates the economic and social security an economy needs to prosper. Beyond that level government takes wealth (capital) from private individuals to 'consume' on low-productivity investments. The economy is denied that the economic benefits of the productive investment that would have been made by private profit seeking individuals. The more the government spends, the greater the economy suffers from a growth perspective.
Don't believe? This data is from over 30 countries over a multi decade period. Practically irrefutable. What is the best government? One that simply provides security and gets out of the way.
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You claim "this data is from over 30 countries over a multi decade period. Practically irrefutable."
ReplyDeleteActually, it's entirely irrefutable. Taking data from over 30 countries from a multi-decade time period and running a regression and expecting accurate results is ridiculous. For a given country, its % public spending is related year-by-year, so all you're actually doing is just "inflating" the yearly values you have.
In order to make your analysis "practically irrefutable", you need to do a year-by-year analysis and run t-tests on your data to determine statistical significance.