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What is the optimum % of government expenditure of GDP
Comments
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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...
I don't believe that anyone has suggested that the answer (a) would be the same whatever the circumstances or (b) be the same value for every country...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.
If you had a different measure of the "total value of goods and services" then it might also be the case that a large government sector would negatively affect growth of that measure, and that the non-existence of government would also negatively affected growth of that measure, and therefore implied some happy compromise.
But until you define that different measure, and do the math, you don't know.0 -
Loughton_Monkey wrote: »...And Korea has a very onerous cost of defense, both on its own troops plus payment to USA for 30,000 of theirs.....
According to the Stockholm International Peace Research Institute, South Korea spends 2.8% of GDP on defence, whilst the UK spend 2.3%. Which is not that massive a difference.
http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures
Oddly enough, South Korea is one of the few countries planning to increase public spending and run a larger deficit.0 -
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.
The merit of considering both thought and empirical experiments/evidence in economics, is as self evident as the existence of a Laffer in specific circumstances. Indeed I would say that was both common sense and obvious.
The conclusion that there may be no universal optima is in truth a hypothesis but given the well known flaws in definition of gdp alone then it's very likely that such an optima would be unsuited to policy formation except is very specific circumstances.0 -
If you had a different measure of the "total value of goods and services" then it might also be the case that a large government sector would negatively affect growth of that measure, and that the non-existence of government would also negatively affected growth of that measure, and therefore implied some happy compromise.
But until you define that different measure, and do the math, you don't know.
Indeed so, that would be a logical conclusion. I would prefer to hold open the equally logical conclusion that there may be more than one optima.
Assuming that the objective, (as well as argumentative discussion), would be policy formulation, then it provides little practical guidance.0 -
Indeed so, that would be a logical conclusion. I would prefer to hold open the equally logical conclusion that there may be more than one optima....
The fact that there may be more than one answer, still means that there is an answer.
As per the previously cited source, someone has analysed the economic performance in France over the period 1871-2008 and has concluded that the answer is 34%.
It may well be the case that if someone else were to similarly analyse the economic performance of (say) Germany then the answer would be 38% or whatever....Assuming that the objective, (as well as argumentative discussion), would be policy formulation, then it provides little practical guidance.
If the answer for France is 34%, and the current number is 56%, I'd have thought that the practical guidance to policy formulation would be outstandingly obvious. But maybe, that's just me.:)0 -
The fact that there may be more than one answer, still means that there is an answer.
no, it means there may be more than one answer
As per the previously cited source, someone has analysed the economic performance in France over the period 1871-2008 and has concluded that the answer is 34%.
It may well be the case that if someone else were to similarly analyse the economic performance of (say) Germany then the answer would be 38% or whatever.
If the answer for France is 34%, and the current number is 56%, I'd have thought that the practical guidance to policy formulation would be outstandingly obvious. But maybe, that's just me.:)
the conclusions from the evidence you have quote could be various.
Personally I have a preference for 42 but maybe that's just me.0 -
Loughton_Monkey wrote: »[*]Governments should spend only on things that are for the common good. Roads, Rail, Infrastructure, Security, defense, education, International Commerce and Relations, a modicum of health care, a basic safety net for the disabled.
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Sounds a fine principle but introduce politics and perceptions of the common good are not always easy to define. How do you define "common"
Universal healthcare can be viewed as the common good if you want a civilised society in which people do not suffer for lack of healthcare provision and believe it is wrong for one person to live because they can afford to do so and another should not because they can't.
Or you could argue that universal education by the state is not for the common good, it is only beneficial to have as many people educated to a level as you need. So you could decide that say 20% of people only need basic reading skills to deliver mail, stack shelves, drive vans so they can leave school at 12yo.
Is unemployment benefit for the common good? Most people probably never need to claim it.
Pick your own examples but I suggest that what is for the common good is a political decision not an objective one.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Loughton_Monkey wrote: »??
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.
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I suspect your figures for Korea are some way out of date.
Even in 2009 Korea government spending was close to 30% largely as a result of Korea increasing government spending per capita more than any other OECD 32 country in the previous decade.
http://www.oecd-ilibrary.org/docserver/download/4211011ec010.pdf?expires=1426930737&id=id&accname=guest&checksum=B8F5C4F5B140C0D1F520DCBBFA9ECC6A0 -
no, it means there may be more than one answer...
And whilst having more than one answer might confuse some people, it does not of itself, present a problem....the conclusions from the evidence you have quote could be various...
The outstandingly obvious conclusion would be that (in this case) France could increase its rate of economic growth by reducing the size of the state sector....Personally I have a preference for 42 but maybe that's just me.
You are perfectly entitled to express whatever preference you like, I am simply drawing your attention to the evidence.0 -
Your're thinking of Switzerland.
Economists.
OECD data on General government expenditures as a percentage of GDP for 2011 shows that Denmark at 57.6% and Sweden at 51.2% are both pretty high up the table, but then so are France at 55.9% and Greece at 52%. Sweden has, of course, been making valiant efforts to get the number down. They were No 1 in 2001, but are now at No 6.
Norway is at 43.9%, which is lower than the OECD average, lower than the UK, about the same as Poland, and only a bit higher than the US at 41.7%.
The thing is that as GDP increases, as it will naturally under a wealth-creating Tory government, then the percentage will reduce if spending is kept at the same levels adjusted for inflation. Also, just because a government spends more does not mean that it is spent well.
Under a Labour government as GDP usually falls due to over-taxation, removal of endeavour and wasteful spend , the percentage of GDP spent would obviously increase !!!
Personally, I think around 40% is a good level under a Tory government which probably equates to 55% under a useless Labour government for comparable services. :rotfl:0
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