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this post was submitted on 13 Aug 2024
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No Stupid Questions
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No such thing. Ask away!
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Government spending/revenue as percentage of GDP is the common proxy for government size. That said actual empirical evidence doesn't lead to clear cut conclusions about the relationship between economic growth/outcomes and government spending. It's very much dependent on the country, quality of government institutions and components of the expenditure.
Intuitively, you can clearly see that if you had 2 identical countries where 50% of gov spending went to building schools, hospitals and roads in one and paying interest on national debt in the other then you would expect very different outcomes with the same government "size".
For the US, that metric has been close to 30% for the last several decades with spikes during crises like 2008 and 2020 (changes to money supply or "minting" is a component of government size but usually a temporary one). It's been relatively stable outside of that since the 1970s. https://tradingeconomics.com/united-states/government-spending-to-gdp
Relative to the rest of the world's rich countries it's on the lower end:
In my view, it's highly dependent on the quality of the government institutions and components of spending. People immediately think of inefficiency and bureaucracy when governments are brought up but there is empirical evidence to show that gov spending on things like education and infrastructure are usually "productive" in additional to contributing to factors that may not be properly captured by measures like GDP growth.
In short, people reducing government spending/regulations as inherently bad/controlling are at least not being completely honest because it's a very complicated discussion.