Every election cycle, men and women who have dedicated their lives to government come before the electors and decry at length the failures of government. They promise to reduce its size and its reach. They realize, they say, that government does not have all the answers to their problems, so they promise “less government” and “lower taxes.” These are no longer solely shibboleths of the right; they are the most mainstream of ideas.
The appeal of Ron Paul, particularly among the young, technocratic elite, demonstrates just how attractive these ideas are, even in their most extreme form. Paul would dismantle the EPA, the FDA and the Federal Reserve, just for a start. For, in the minds of Libertarian extremists, there is nothing that government provides that could not be better handled by the all-knowing, all-powerful free market. This is an article of faith with these people. They are the Christian Scientists of economics. “Forget about trying to solve your problems,” they say, “just put your life into the hands of the free market and everything will be just fine. Its will be done.”
Today, in the Ideas section of the Boston Globe, Jeff Madrick mounts a vigorous defence of big government and provides an indictment of the accepted wisdom that low taxes lead to economic growth. Madrick points to the work of mainstream economist Peter Lindert, quoting from his 2004 book, Growing Public: ”It is well-known that higher taxes and transfers reduce productivity. Well-known – but unsupported by statistics and history.”
According to Madrick:
Lindert’s work surveyed a century of data across numerous countries and found that high taxes and social spending did not slow the growth of productivity or GDP. Statistically speaking, Lindert found no relationship between the level of social spending and economic growth. High tax nations like Norway grow rapidly and produce high standards of living. Even the income per hour of work in nations like France and Germany is equal to or even exceeds America’s.
We’ve become so cynical about the government, so embittered by our interactions with less-than-competent public officials, so disenchanted by sex scandals and broken promises, that we forget that public services, despite all their failings, power the economy, regulate its abuses, and increase the standard of living for all us.
From building the railroads and the highway system, to developing our universal educational infrastructure, right up to the government research and leadership that gave us the Internet (thanks, Al Gore – no, really!), government programs and social spending are often the engine that drives progress.
Madrick, whose latest book, The Case for Big Government, will be released in November, sums up like this:
There is no rich nation in the world today, including America, that has grown wealthy without significant government involvement. And there will be no rich nation in the future that can stay wealthy without robust government, either.
It’s obvious that government can’t solve all of our problems, but neither can the market. It is only a healthy balance of both that is capable of making the kind of future that we want. Now all we need is a government that we can believe in for a change.
