What is the optimum % of government expenditure of GDP

CLAPTON

there is a difference between the government spend and what it is spent on

In some of the Scandinavian countries the government take is very high but nevertheless they have a free market approach

so e.g. schooling is highly funded but people are free to choose the type of school : many of which are run by private companies

so in some sense it reflects government redistributing income and not determining how it is spent

antrobus

CLAPTON wrote: »

there is a difference between the government spend and what it is spent on

In some of the Scandinavian countries the government take is very high but nevertheless they have a free market approach

so e.g. schooling is highly funded but people are free to choose the type of school : many of which are run by private companies

so in some sense it reflects government redistributing income and not determining how it is spent

You're clearly thinking about Sweden.

CLAPTON

antrobus wrote: »

You're clearly thinking about Sweden.

maybe but the general principle is that there is clearly not an optimal (however defined) value

what for example is the difference between a government owned and operated water supply and a heavily regulated one although one will show on the national accounts and one won't

antrobus

CLAPTON wrote: »

maybe...

Free market approach, and publicly funded schools run by private companies, would fit Sweden.

CLAPTON wrote: »

... but the general principle is that there is clearly not an optimal (however defined) value...

Clearly that is not the case, as there is a whole bunch of economists publishing articles in learned journals that conclude that there is an optimal range of values.

That conclusion might well be wrong, but it's not clear that it's wrong.

CLAPTON wrote: »

...what for example is the difference between a government owned and operated water supply and a heavily regulated one although one will show on the national accounts and one won't

What difference? Both will show in the national accounts. The national accounts measure the economic activity of the nation as a whole.

CLAPTON

antrobus wrote: »

Free market approach, and publicly funded schools run by private companies, would fit Sweden.



Clearly that is not the case, as there is a whole bunch of economists publishing articles in learned journals that conclude that there is an optimal range of values.

That conclusion might well be wrong, but it's not clear that it's wrong.



What difference? Both will show in the national accounts. The national accounts measure the economic activity of the nation as a whole.

Ambiguous use of the word 'national'

in this context both will show as a contribution to gdp but one will appear in the government spend and one won't.


In my view the economists are clearly wrong as clearly gdp is not a good measure of real income and optimal is not very well defined.

At best one might logically conclude there is an 'optimal' (suitably defined) for a particular country at a particular time.

antrobus

CLAPTON wrote: »

Ambiguous use of the word 'national'....

Apology accepted.:)

CLAPTON wrote: »

..in this context both will show as a contribution to gdp but one will appear in the government spend and one won't. ..

Correct.

CLAPTON wrote: »

...In my view the economists are clearly wrong as clearly gdp is not a good measure of real income
and optimal is not very well defined.

At best one might logically conclude there is an 'optimal' (suitably defined) for a particular country at a particular time.

Optimal is clearly defined.

There is evidence that a large government sector negatively affects economic growth, whilst there is also evidence that the non-existence of government negatively affects economic growth. Ergo there must be some happy compromise between these two extremes.

CLAPTON

antrobus wrote: »

Apology accepted.:)




There is evidence that a large government sector negatively affects economic growth, whilst there is also evidence that the non-existence of government negatively affects economic growth. Ergo there must be some happy compromise between these two extremes.

in the same way that the existence of a laffer curve can be said to be obvious then one or more mathematical maxima can reasonably be deduced for government to gdp curve.

However that does not imply that any such maxima is independent of gdp nor does it imply it doesn't vary with circumstances nor does it imply the same value in differing countries.

given that gdp is a poor measure of total value of goods and services then any such optima is poorly defined as a guide to actual actions and policies.

tincans6

Loughton_Monkey wrote: »

We should follow the Asian model, and think more in terms of <20%.

Would this be the same Asian model where South Korea is closer to 30% and Japan closer to 40% ?

Generali

CLAPTON wrote: »

in the same way that the existence of a laffer curve can be said to be obvious then one or more mathematical maxima can reasonably be deduced for government to gdp curve.

However that does not imply that any such maxima is independent of gdp nor does it imply it doesn't vary with circumstances nor does it imply the same value in differing countries.

given that gdp is a poor measure of total value of goods and services then any such optima is poorly defined as a guide to actual actions and policies.

Are you suggesting, as you appear to be, that macro economics disgards all empiricism and uses thought experiments alone? That seems a pretty crap way to move forwards quite frankly.

I think you're drawing 'obvious' conclusions from 'common sense' without considering what you are actually saying. Most serious breakthroughs in economics have come from empirical evidence starting with Adam's pin factory and moving onwards.

Loughton_Monkey

tincans6 wrote: »

Would this be the same Asian model where South Korea is closer to 30% and Japan closer to 40% ?

??

Korea 21.51
Hong Kong: 20.88
Taiwan: 21.15

Yes, Japan is 41.12 but still behind UK at 45.46.

And Korea has a very onerous cost of defense, both on its own troops plus payment to USA for 30,000 of theirs.

Their pensions, in South Korea, are quite good, and privately funded by the employer. And they can take them in cash as we will be able to do shortly.